TFSA: 3 Canadian Stocks to Hold for a Lifetime

TSX tech stocks such as Kinaxis and Docebo have the potential to generate game-changing returns to shareholders in the upcoming decade.

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TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.

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The benefits offered by the TFSA (Tax-Free Savings Account) make it an ideal account to hold quality growth stocks and benefit from outsized gains over time. As all returns derived from qualified investments held in a TFSA are exempt from Canada Revenue Agency taxes, here are three Canadian stocks to buy and hold right now.

Docebo stock

Among the fastest-growing Canadian tech stocks, Docebo (TSX:DCBO) should be on your shopping list. Valued at $1.73 billion by market cap, Docebo provides e-learning solutions to enterprises and should outperform the broader markets in the upcoming decade.

Docebo ended the second quarter (Q2) of 2024 with subscription sales of US$49.8 million, up 22% year over year, while total sales stood at US$53.1 million. Its gross profit rose 22% to US$42.8 million, indicating a margin of 80.7%, which is similar to the year-ago period.

Docebo is now positioned to report consistent profits due to an asset-light model and high operating leverage. It reported an adjusted net income of US$7.9 million, or US$0.26 per share, in Q2, compared to earnings of US$4.7 million, or US$0.14 per share, last year.

The company ended Q2 with an annual recurring revenue, or ARR, of US$205.9 million, up 19% year over year. A widening base of recurring sales should help Docebo report consistent revenue across market cycles.

With a free cash flow of US$8.4 million, Docebo now has the flexibility to reinvest in organic growth and target accretive acquisitions.

Kinaxis stock

Kinaxis (TSX:KXS) is a TSX tech stock that offers supply chain-related products and solutions to enterprises. The company went public in June 2014 and has returned over 1,000% to shareholders. Despite its remarkable gains, Kinaxis trades 32.5% below all-time highs, allowing you to buy the dip.

Kinaxis reported revenue of US$118.28 million in Q2, up 12% year over year. The Canadian entity emphasized that its SaaS (software-as-a-service) backlog grew 30% as demand drivers intensified, allowing Kinaxis to invest in strategic go-to-market initiatives. Moreover, its annual recurring revenue rose from US$293 million to US$339 million in the last 12 months.

Analysts tracking KXS stock expect its earnings to expand from $2.18 per share in 2023 to $4.35 per share in 2025. Priced at 35.6 times forward earnings, KXS stock trades at a premium, but it is forecast to expand earnings by more than 60% annually in the next five years.

Tecsys stock

The final TSX stock on the list is Tecsys (TSX:TCS), another company offering advanced supply chain solutions. Valued at $631 million by market cap, TCS stock has returned close to 600% to shareholders in the past decade after adjusting for dividend reinvestments.

According to Tecsys, fiscal 2024 (ended June) was a landmark year for the company as its SaaS sales rose by 39%. The company’s strong financial performance in fiscal 2024 showcases the strength of its business model, as SaaS remaining performance obligations grew by 43%.

TCS stock is quite expensive, priced at 75.6 times forward earnings. However, analysts expect earnings to expand from $0.13 in fiscal 2024 to $0.56 in 2025 and $0.85 in 2026.

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 has positions in and recommends Tecsys. The Motley Fool recommends Docebo and Kinaxis. The Motley Fool has a disclosure policy.

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