As a TFSA (Tax-Free Saving Account) investor, it should be your goal to build wealth over the course of many years or decades. The longer your time horizon, the better. Not only will stocks stand to be less risky over extremely extended periods of time, but you’ll also give your portfolio a chance to really feel the profound powers to be had from compounding. Indeed, compounding’s effect gets more pronounced with time. And if you’ve got some solid core holdings within your TFSA, you really don’t need to do much for compounding to keep building on itself over the years.
Will every year be a good year? Definitely not. However, stocks, especially the bluest blue chips out there, tend to gravitate higher over the course of years. And given this, I believe stocks remain the best asset class for investors. As rate cuts come into play, the days of high-rate, risk-free assets could come to a close. But if lower sparks jolt stocks, I think TFSA investors have a lot to gain by braving any rough patches in the markets that’ll inevitably happen.
When the markets are sagging, and the headlines are starting to bring up fears of past crashes or recessions, it’s hard to be contrarian. When markets turn unexpectedly, suddenly, all the negative headlines and bears go back into hibernation, and it’s all about how far a bull can run. Personally, I think we’re in the early innings of a bull market, one that could continue to reward dip buyers and TFSA investors who buy incrementally over time.
With the latest 2024 contribution (coming in at $7,000), there’s a good amount to put to work. And in this piece, we’ll run by two intriguing ideas worthy of attention or a spot on one’s watchlist.
Aritzia
First up to the plate, we have Aritzia (TSX:ATZ), a women’s clothing company that’s been rebounding in a massive way in recent sessions. Undoubtedly, the stock has been a major loser in recent years. In 2024, though, it’s suddenly one of the TSX Index’s hottest plays. With a massive 27.4% gain posted year to date (that’s just over two weeks!). The company blew away the numbers, and many overly gloomy analysts and investors were caught off guard. I think the gains for the year are not yet over!
Now that the stock has earned all of our attention, I believe shares are a compelling buy as it continues to recover the considerable ground it has lost since its peak a few years ago. I think new highs are very much attainable for a firm that could have a few more stellar quarters up its sleeves for the new year!
At the end of the day, I like the brand and its growth profile, which, I believe, remains underestimated by likely everyone who’s not an Aritzia customer. Growth-focused TFSA investors take notice as the bull looks to run!
Canadian Tire
Canadian Tire (TSX:CTC.A) is a less exciting name than growth-focused Aritzia, but it’s still a great dividend and value play for TFSA investors looking for a more yawn-inducing core holding for the long run. Over the past year, shares are down around 9%, and with no recent spike, it’s tough to give the long-time retailer the benefit of the doubt.
Still, there’s a lot to love about the iconic retailer as the worst of Canada’s slowdown begins to come to an end (perhaps lower rates will help pad the economic landing?).
The stock trades at 14.86 times trailing price-to-earnings to go with a 4.87% dividend yield. Not bad, considering Canadian Tire is a retailer that’s won the hearts of many discretionary consumers across the nation. As the bull market moves forward, I think it’s tough to bet against the retail giant as it looks to cash in on a consumer bounce-back.
