If you’re serious about generating massive wealth in the stock market, then it’s imperative that you focus on growth stocks. These are companies that have the ability to greatly outpace the market when stocks are rising. That’s in large part due to the cutting-edge nature of their businesses and propensity to push their industries in new directions.
Investors who choose to buy shares of growth stocks in their Tax-Free Savings Accounts (TFSA) could see even more gains, as those returns wouldn’t be subject to any income tax. In 2024, Canadians were given an additional $7,000 of contribution room in their TFSAs. If you’ve been 18 since 2009 and have never contributed to your TFSA, you could have $95,000 of contribution room available.
In this article, I’ll discuss two of the best growth stocks to buy with $7,000. These two companies have shown an ability to greatly outpace the market in recent times. I believe they could continue to grow at steady rates for years to come.
This is my favourite TSX growth stock
If I could only buy one TSX growth stock, it would likely be Constellation Software (TSX:CSU). For many Canadians, this may be the greatest stock that they haven’t heard of. One reason why Constellation Software continues to remain unknown to many Canadians is because it doesn’t operate a consumer-facing business. You won’t see Constellation Software’s name plastered everywhere you look.
This company operates in the background. It acquires vertical market software (VMS) businesses. Upon the closing of an acquisition, that business will have all of the resources needed to become an exceptional business unit in Constellation Software’s larger portfolio. What’s most important in Constellation Software’s business model is finding the right businesses to acquire. Over the years, it has managed to perfect its strategy.
That apt ability to acquire the right businesses has been reflected in Constellation Software’s stock price. With an all-time gain of more than 19,100%, this is likely the most successful stock in Canadian history. Constellation Software stock has gained more than 56% over the past year. I believe it could continue growing for a long time.
A company I believe in strongly
Shopify (TSX:SHOP) is the second growth stock that Canadians should consider buying right now. Unlike Constellation Software, this is a company that needs little introduction. Many Canadians will know this company for its e-commerce platform. Shopify’s outstanding platform has the ability to cater to anyone from first-time entrepreneurs to large-cap enterprises.
Shopify used to be Canada’s largest company by market cap. Unfortunately, after a more than 80% drop in its stock price, the company lost that title. Over the past year, however, Shopify stock has been booming. It has gained more than 120%. With e-commerce continuing to grow in penetration, and Shopify increasing its market share, I envision this stock growing even more over the next decade.
