Canadian couples can consider holding quality growth stocks in the TFSA (Tax-Free Savings Account). The TFSA is a popular registered account among Canadians, as any gains earned in the account are exempt from Canada Revenue Agency taxes.
You can hold a variety of asset classes in the TFSA, including stocks, mutual funds, exchange-traded funds, and bonds. Moreover, you can also hold stocks trading south of the border, which provides your portfolio with regional or geographic diversification.
The maximum cumulative TFSA contribution room for an individual has increased to $95,000 in 2024, and this figure doubles to $190,000 for Canadian couples. While you should invest a majority of capital in low-cost index funds, you can consider allocating a small portion of your savings towards quality growth stocks in the U.S.
Let’s see how TFSA couples can create a robust equity portfolio with just $40,000 in 2024.
Invest in CrowdStrike stock
One of the largest cybersecurity companies globally, CrowdStrike (NASDAQ: CRWD) has staged a remarkable comeback since 2023. The tech stock has almost tripled in market value since January 2023, valuing it at a market cap of US$71.4 billion.
CrowdStrike offers a cloud-based artificial intelligence cybersecurity platform to enterprises. Over the years, the company has expanded its portfolio of products, resulting in higher customer engagement and retention rates. Over 23,000 enterprises use CrowdStrike, allowing it to report revenue of US$2.8 billion in the last 12 months, up from US$481 million in fiscal 2020 (ended in January).
Unlike several other growth stocks, CrowdStrike enjoys consistent profits and reported a free cash flow margin of 30% in fiscal Q3 2024.
Invest in Datadog stock
Datadog (NASDAQ: DDOG) stock is up roughly 80% since the start of 2023 and is valued at US$29 billion by market cap. It provides observability and cybersecurity software, allowing enterprises to monitor the performance of IT infrastructure.
Datadog is set to end 2023 with US$2.1 billion in sales, indicating a year-over-year growth rate of 24%. Moreover, the company estimates its total addressable market to grow from US$45 billion in 2023 to US$62 billion in 2026.
It shows us that Datadog has enough room to grow its sales higher as enterprise-wide cloud spending is forecast to gain momentum in the upcoming decade due to demand for monitoring, observability, and security solutions.
Datadog ended Q3 2023 with more than 26,500 customers, an increase of 21% compared to the year-ago period. The number of customers spending at least US$100,000 on Datadog’s offerings has increased by 20% in Q3.
So, Datadog is successfully expanding its customer base as well as customer spending, resulting in solid revenue and earnings growth. For instance, larger customers who generated over US$1 million in annual recurring revenue or ARR grew by 46% in Q3.
Analysts tracking the tech stock expect Datadog to grow sales to US$2.6 billion in 2024. The company is also forecast to expand adjusted earnings to US$1.82 per share in 2024, up from US$0.98 per share in 2022. Priced at 71 times forward earnings, DDOG stock trades at a premium. However, its earnings are on track to expand by more than 33% annually in the next five years.
