Most Canadians who open, contribute and invest through the Tax-Free Savings Account (TFSA) want to reach their long-term financial goals. Tax-free income and money growth are the salient attributes of this savings vehicle. TFSA balances can compound faster if you reinvest dividend income from Canadian stocks.
Fortunately for TFSA investors, there are excellent buying opportunities on the TSX today. You have a real chance of doubling your TFSA’s value by using your available contribution rooms to purchase shares of Valeura Energy (TSX: VLE), Secure Energy Services (TSX: SES), and PHX Energy Services (TSX: PHX).
High-flyer
Valeura Energy is a non-dividend payer, but this small-cap stock is a high-flyer. At $5.57 per share, the year-to-date gain is 96.13%, while the trailing one-year price return is 202.72%. Had you invested $6,500 a year ago, your money would be $19,676.63 today. The overall return in 3.01 years is 1,014%.
The $561.8 million upstream oil & gas company acquires and develops oil-producing assets internationally. Its prominent assets are in the offshore Gulf of Thailand and the Thrace basin in onshore northwest Turkey. In the first quarter (Q1) of 2024, net income dropped to US$19.4 million from US$234.2 million in Q1 2023 due to production operations in Thailand.
The work enhanced future development potential, while cash flow generated from operations reached US$81.2 million compared to -US$26.1 million a year ago. Besides output increasing to more than 50% above the exit rate in 2023, its president and chief executive officer (CEO), Sean Guest, said it was an exciting quarter from a growth standpoint. Notably, as of March 31, 2024, Valeura Energy is “debt-free.”
Industry leader
Secure Energy Services, or SES, continues to beat the broader market. At $11.88 per share, the energy stock is up 27.11% year to date versus the TSX’s +5.30%. If you invest today, the dividend offer is 3.31%. Current investors earn two ways: price appreciation and dividends.
This $2.9 billion company operates in the waste management industry and engages in environmental and energy infrastructure businesses. Its infrastructure network includes waste processing, transfer, and metal recycling facilities, industrial landfills, crude oil and water gathering pipelines, crude oil terminals and storage facilities.
In Q1 2024, revenue increased 49% to $2.85 billion versus Q1 2023, while net income soared 667.27% year over year to a record $422 million. SES’s new CEO, Allen Gransch, said SES is extremely well-positioned to advance its strategy and cement its leadership position in waste management and energy infrastructure.
Cash cow
PHX Energy Services is a cash cow and dividend titan. At $9.10 per share (+14.82% year to date), the yield is a mouth-watering 9.15%. Given the 36.65% payout ratio, the quarterly dividends should be safe and sustainable.
This $415 million Calgary-based company provides horizontal and directional drilling services to oil and natural gas exploration and development companies. Its customers are from Canada, the U.S., Albania, the Middle East, and other international markets.
In Q1 2024, net earnings declined 22% year over year to $17.45 million, although cash flow from operating activities jumped 186% to $11.17 million, and excess cash flow reached $7.4 million. According to PHX president Michael Buker, the first-quarter achievements display the strength of operations and technology.
Excellent second-liners
Valeura Energy, SES, and PHX may not be anchor stocks but are excellent second-liners in an investment portfolio. Their mighty performances can help double your TFSA balance.
