The U.S. Fed brought some good news for the investor community. It paused the rate hike and officially signalled a 75-basis-point interest rate cut in 2024. But investors expect the rate cut to go up to 150 basis points. This monetary policy easing will pump more money into the economy by making borrowing affordable. But before that, it would try to help borrowers avoid defaulting on their monthly payments. A rate cut hints that bond yields are at their cyclical high and future yields would be lower, shifting investors to stocks for better returns.
Three FHSA shares to buy before the end of 2023
Now is a good time to be a Canadian investor as the Canada Revenue Agency (CRA) introduced a First Home Savings Account (FHSA). You can invest up to $8,000 before the year-end and claim tax deductions. And this is over and above the $6,500 Tax-Free Savings Account contribution.
At the end of 2021, it was time to rebalance your portfolio from tech stocks to oil stocks. Now it’s time to rebalance your portfolio to move from oil to tech. Next year will see interest rates fall and economic growth revive, creating a conducive environment for riskier investments. Here are three growth stocks you can consider buying through your FHSA and build a sizeable down payment for your first home.
Bombardier shares
Business jet maker Bombardier (TSX: BBD.B) is the turnaround story of 2021 and 2022, as the new management took the debt-laden company out of the ashes and made it profitable. If you want to invest in growth stocks, your first preference would be a company that makes profits. And with 56 aircraft deliveries in the fourth quarter, the company is set to report strong quarterly earnings in February. Moreover, it has paid off all debts maturing in 2024 and 2025, giving it flexibility to invest in the business.
Bombardier already has a US$14.7 billion order book that could keep it busy for two years. For the future, Bombardier is looking at defence for US$1 billion in revenue and aftermarket services for its own planes. More flying will require more maintenance, creating a regular cash flow. The stock dipped 32% from its 2023 peak of above $74. Consider buying the stock at $50 before it rallies past its previous peak to make a new high.
Nuvei stock
Payments platform Nuvei (TSX: NVEI) shares are still near the levels where short sellers left it by doubting its acquisitions and crypto exposure. The tech stock is past this phase and has signed up with a global brand like Microsoft. Microsoft will use Nuvei’s payment solutions to allow its customers in the Middle East and Africa to make payments for software subscriptions or in-game purchases. Microsoft is a feather in Nuvei’s cap, as one brand attracts others.
The platform already earns more than 80% of its revenue from e-commerce volumes. However, it is now looking to partner with large enterprises to provide its payment solutions, which could give it revenue stability. However, Nuvei’s stock price could remain volatile as it processes payments in +40 cryptocurrencies.
Looking at the big picture rising consumer and enterprise spending could drive transaction volumes and push Nuvei stock to its cyclical peak of $80 or above.
Hive shares
Speaking of cryptocurrencies, Hive Digital Technologies (TSXV:HIVE) is a relatively safer bet than other crypto stocks as the company has diversified into high-performance cloud computing services. Moreover, its crypto inventory comprises Bitcoin, the first crypto coin that has a store in value.
The last three years showed that Bitcoin prices move in tandem with the economy. A strong economy boosts investor confidence, which drives BTC prices. One way to get exposure to BTC prices is Hive, as diversifying into digital cloud services has limited the stock’s downside.
The company’s growth depends on the growing adoption of artificial intelligence and other high-performance computing applications. Hive can earn a stable revenue by leasing the cloud computing power of its graphics card-powered data centres. The stock can double your money in a growing economy and give unprecedented growth in a crypto wave.
