TFSA Investors: 2 Stocks That Could Turn $500 Into $1,500 by 2030

Here’s why holding growth stocks such as Docebo and Lululemon might be a good idea for TFSA investors in 2024.

| More on:
growing plant shoots on stacked coins

Image source: Getty Images

Investing in quality growth stocks should help investors generate outsized gains over time. Typically, growth stocks command premium valuations during bull runs and trail the broader markets significantly when sentiment turns bearish.

So, if you expect the equity markets to move higher through 2030, holding quality growth stocks such as Lululemon (NASDAQ:LULU) and Docebo (TSX:DCBO) in a TFSA (Tax-Free Savings Account) might be a great strategy.

The TFSA was introduced in 2009 and allows Canadian investors to benefit from tax-free gains for life. You can hold qualified investments such as stocks, bonds, mutual funds, and exchange-traded funds in a TFSA and create a diversified portfolio while sheltering your returns from Canada Revenue Agency taxes.

The TFSA contribution limit in 2024 has increased to $7,000. Here’s why you should consider investing $500 in Docebo and Lululemon right now.

Lululemon is down 31% from all-time highs

Valued at a market cap of US$44 billion, Lululemon stock has returned roughly 2,400% since its initial public offering in July 2007. Despite these market-thumping gains, Lululemon stock trades 31% below all-time highs, allowing you to buy the dip.

Lululemon stock lost over 16% in a single trading session following its fiscal fourth quarter (Q4) of 2024 (which ended in January). In Q4, Lululemon reported revenue of US$3.21 billion and adjusted earnings of US$5.29 per share. Comparatively, analysts forecast revenue at US$3.19 billion and earnings at US$5 per share.

While Lululemon beat consensus estimates in Q4, it issued disappointing guidance as it expects to see soft sales in the United States. Lululemon emphasized it is wrestling with uncertain demand and lower discretionary spending due to an uncertain macro environment. For instance, in the Americas, Lululemon sales were up just 9%, compared to a 29% growth in the year-ago period.

Alternatively, the pullback in LULU stock allows you to buy a quality stock at a discount. Priced at 24.7 times forward earnings, LUU stock is forecast to expand earnings by 11.3% annually in the next five years. Analysts remain bullish on LULU stock and expect shares to surge over 30% in the next 12 months.

Is Docebo stock a good buy right now?

Docebo is a Canada-based company that offers e-learning solutions to enterprises. Valued at $1.4 billion by market cap, DCBO stock is down 46% from all-time highs.

In Q4 of 2023, Docebo reported subscription sales of US$46.5 million, up 28% from the year-ago period. Subscription sales account for 94% of revenue, allowing Docebo to generate stable cash flows across business cycles.

Similar to other asset-light tech companies, Docebo enjoys high profit margins, ending Q4 with a gross margin of 81.2%. However, unlike several other growth stocks, Docebo is now reporting consistent profits, ending Q4 with an adjusted net income of US$8.3 million or US$0.26 per share, up over 100% year over year.

Additionally, Docebo reported a free cash flow of US$7 million, indicating a margin of 14.2%. Analysts now expect Docebo’s earnings to take off due to its high operating leverage. Bay Street forecasts Docebo to improve earnings from US$0.08 per share in 2023 to US$0.73 per share in 2024 and US$1.14 per share in 2025.

DCBO stock might seem expensive at 64 times forward earnings, but it trades at a 20% discount to consensus price target estimates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Docebo and Lululemon Athletica. The Motley Fool has a disclosure policy.

More on Investing

Increasing yield
Dividend Stocks

2 High-Yield Dividend Stocks to Buy as They Bounce

These top dividend stocks still look cheap.

Read more »

Value for money

3 Top Value Stocks to Buy in May

Given their healthy growth potential and attractive valuation, I am bullish on these three value stocks.

Read more »

ETF chart stocks
Dividend Stocks

The Best Canadian ETFs $100 Can Buy on the TSX Today

These three ETFs are the perfect options for investors looking for growth, income, and a base to hold long term.

Read more »

money cash dividends
Dividend Stocks

TFSA Pension: How to Earn $4,750 Per Year in Tax-Free Income

Here's why the TFSA should be an integral part of your retirement savings strategy.

Read more »


TFSA Value Stocks: 2 Laggards That Could Come Soaring Back

Spin Master (TSX:TOY) and another fallen stock could be great buys on weakness.

Read more »

Man considering whether to sell or buy
Dividend Stocks

TELUS Stock: Buy, Sell, or Hold?

TELUS (TSX:T) stock has seen operational improvements but still remains down on a year-over-year basis. So, is it worth it?

Read more »

Aircraft wing plane
Stocks for Beginners

Bombardier Stock Is up 16% After Earnings: What Investors Need to Know

Bombardier’s continued focus on high-margin service revenue, expansion of manufacturing capabilities, and solid order book could help its stock continue…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: 2 Top TSX Dividend Stocks That Still Look Oversold

These great Canadian dividend stocks now offer high yields.

Read more »