Canadian stocks are slowly gaining momentum following a weak start to the year. As of this writing, the TSX is up 4.3% year to date, with 9 of 11 primary sectors in positive territory. Also, on March 19, 2024, Statistics Canada released the Consumer Price Index (CPI) report, which showed a 2.8% inflation rate in February compared to 2.9% in January.
Lower interest rates are tailwinds for stocks. Investors hope the initial cut comes soon if inflation’s downward trend continues. The Bank of Canada has yet to act, although it should be an excellent time to scout for cheap stocks to add to your Tax-Free Savings Account (TFSA).
Propel Holdings (TSX:PRL) and Secure Energy Services (TSX:SES) are buying opportunities in March before they become expensive. In addition to their market-beating returns, both stocks offer decent dividend yields.
Thriving fintech
Propel Holdings in the financial services sector is doing better than Canada’s Big Bank stocks thus far in 2024. The $543.4 million financial technology company’s AI-driven lending/underwriting platform caters to underserved customers or borrowers.
At $15.83 per share, investors enjoy a 22.9% year-to-date gain on top of the 2.98% dividend. Also, the current share price is 133.8% higher than a year ago. If you had invested $6,500 in Propel one year ago, your TFSA balance would be $15,198.67. The total return should be higher if you include the dividend yield.
Propel’s business thrives despite the high-interest rate environment. In fiscal 2023, revenue and net income rose 40% and 84% year over year respectively to $316.5 million and $27.8 million. Its CEO, Clive Kinross, said it was another year of significant revenue and profitability growth.
Exceptional year
Secure Energy Services operates in the waste management industry. The $3.2 billion company is known for its environmental and energy infrastructure business. It provides solutions through its waste management facilities, industrial landfills, and pipeline operations.
At $11.44 per share, the industrial stock is up 21.3% year to date. Moreover, the trailing one-year price return is 97.5%, while the overall return in 3 years is 233.9%. If you invest today, the dividend yield is 3.44%. All dividend earnings in your TFSA are tax-free.
“2023 was an exceptional year for SECURE, marked by strong financial performance that underscores the stability and growth potential inherent in our core waste management and energy infrastructure operations,” said Rene Amirault, CEO of SECURE.
In the 12 months ended December 31, 2023, total revenues and net income increased 3% and 6% respectively to $8.2 billion and $195 million versus 2023. Notably, the $162 million Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in Q4 was a new record.
According to Amirault, two critical infrastructure growth projects supported by long-term commercial agreements should deliver additional, consistent cash flows for SECURE across our business cycles. He adds the company delivered significant shareholder value last year, returning $280 million to shareholders through strategic share repurchases and quarterly dividends.
Eligible TFSA investments
Given the nature of their businesses, Propel Holdings and Secure Energy Services have visible growth and earning potential. Moreover, both stocks are eligible investments in a TFSA and investors can earn tax-free income in two ways: capital gains and dividends.
