The Tax-Free Savings Account (TFSA) contribution limit of $7,000 can seem like a lot at first glance. But if you break it down, that’s about $583 a month. By drip-feeding this amount into growth stocks, you can spread your investments throughout the year, buying shares at different prices and reducing the impact of market ups and downs. Over time, this could potentially compound your returns as these growth stocks increase in value, all while your earnings stay tax-free in the TFSA. Plus, it’s a smart way to build wealth gradually without needing a big lump sum upfront! So, let’s get into today how to get started and some stocks to consider.
Autopilot
Drip-feeding growth stocks through the dollar cost-averaging method is like investing on autopilot. Instead of trying to time the market (which, let’s be honest, is basically impossible), you invest a set amount of money regularly. That could be, say, each month, regardless of what the stock price is doing. The beauty of this approach is that it averages out the highs and lows over time. So, in some months, you’ll buy shares when they’re cheaper, and in other months, you’ll buy when they’re pricier. But overall, it smooths things out, lowering the risk of going all-in at a bad time.
The real magic happens with growth stocks. As these companies expand and their share prices (hopefully) rise, your small, regular investments could grow into a tidy sum. Plus, this method is perfect if you’re not sitting on a big lump sum of cash to invest all at once. By dollar-cost averaging, you’re giving your investments time to grow while staying consistent, even when the market gets bumpy. It’s a relaxed way to build wealth steadily without stressing too much over timing the perfect buy. So, let’s look at some stocks to buy.
Aritzia
Aritzia (TSX:ATZ) is looking like a great buy right now, especially for growth-focused investors. Over the past year, the stock has seen an impressive 52-week change of over 114%, with a steady climb to a recent high of $48.23. While its price-to-earnings (P/E) ratio is on the higher side at 68.69, the forward P/E of 25.97 suggests investors are optimistic about its future earnings potential. Aritzia’s ability to deliver consistent revenue growth, with a quarterly revenue increase of 7.8% year over year, speaks to its solid business model. Even as it faces a bit of an earnings dip, with quarterly earnings down by 9.4%. However, given its strong brand presence and loyal customer base, Aritzia seems poised to keep expanding.
Moreover, with $100 million in cash on hand and a manageable debt-to-equity ratio of 97.38%, Aritzia has the financial flexibility to continue investing in growth. The company’s return on equity (ROE) of 9.84% shows it’s making good use of its resources to generate profits. Though it doesn’t offer a dividend, the focus on reinvesting earnings into the business makes it an attractive stock, especially for those looking for long-term growth. If you’re looking for a company with solid fundamentals and room to grow, Aritzia could be a stylish addition to your portfolio.
Celestica
Celestica (TSX:CLS) is shaping up to be a fantastic growth stock pick, especially with its recent 52-week surge of over 112%. The company is firing on all cylinders, with impressive quarterly revenue growth of 23.3% year over year, thereby showing that it’s gaining momentum in the electronics manufacturing space. Even more exciting is the quarterly earnings growth of 79.5%, proving that Celestica is not just growing in sales. It’s also translating that into solid profits. With a forward P/E ratio of 11.72, it’s trading at an attractive valuation compared to its growth, thereby making it a compelling buy for growth-focused investors.
On the financial side, Celestica is in a strong position, with $434 million in cash and a manageable debt-to-equity ratio of 52.78%. The company’s return on equity (ROE) is an impressive 20.99%, showing that management is effectively using its resources to generate profits. With no dividend payout, Celestica is reinvesting its earnings into future growth, making it a great option for those looking to benefit from long-term gains. If you’re looking for a growth stock that’s riding a wave of success, Celestica seems like a solid choice to add to your portfolio!
