Supercharge Your TFSA With These 3 Growth Stocks

Here’s why investors should consider holding quality growth stocks such as Docebo and Datadog in a TFSA to benefit from outsized gains.

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The primary benefit of holding quality growth stocks in a Tax-Free Savings Account (TFSA) is to generate tax-sheltered market-beating returns. Any returns generated in this registered account from qualified investments are exempt from taxes.

Imagine investing $1,000 in Shopify soon after its IPO (initial public offering) and holding it in a TFSA. Today, the investment would be worth more than $36,000, all of which is tax-free.

Here, I have identified three other quality growth stocks that can supercharge your TFSA portfolio in the upcoming decade.

Created with Highcharts 11.4.3Datadog + CrowdStrike + Docebo PriceZoom1M3M6MYTD1Y5Y10YALL17 Oct 202215 Oct 2024Zoom ▾Jan '23Apr '23Jul '23Oct '23Jan '24Apr '24Jul '24Oct '240www.fool.ca

CrowdStrike stock

Down 32% from all-time highs, CrowdStrike (NASDAQ:CRWD) is among the largest cyber-security companies in the world. Valued at US$74 billion by market cap, CrowdStrike has already returned 421% to shareholders since its IPO in 2019.

CrowdStrike has increased its sales from US$481 million in fiscal 2020 (ended in January) to over US$3 billion in fiscal 2024. In the last 12 months, its revenue has risen by 33% year over year to US$3.5 billion.

Unlike other unprofitable growth stocks, CrowdStrike has reported free cash flow of US$1.2 billion in the last four quarters, indicating a margin of 33.4%. Moreover, its free cash flow has risen from less than US$20 million in fiscal 2020, which showcases the company’s high operating leverage.

CrowdStrike ended fiscal Q2 of 2025 with annual recurring revenue, or ARR, of US$3.9 billion, an increase of 32% year over year. Its operating margin improved by two percentage points to 24%, while free cash flow rose by 44% to US$272 million.

The company has forecast its total addressable market at US$100 billion, which means its growth story is far from over.

Docebo stock

A Canadian company part of the e-learning segment, Docebo (TSX:DCBO) should be part of your TFSA portfolio in 2024. Valued at $1.9 billion by market cap, Docebo ended Q2 with 3,898 customers and US$206 million in annual recurring revenue.

Its subscription sales account for 94% of the top line, which should enable Docebo to report stable cash flows across market cycles. Moreover, 81% of the ARR added in 2023 was represented by customers who chose multi-year contracts.

Docebo’s average annual contract value rose from US$12,000 in 2014 to US$52,000 in Q2 2024. Further, its net dollar retention rate stood at 104%, which suggests that existing customers increased spending on the platform by 4% in the last year.

Like CrowdStrike, Docebo is also profitable, reporting free cash flow of US$27 million in the last 12 months, up from US$15 million in 2023.

Datadog stock

The final growth stock on the list is Datadog (NASDAQ:DDOG). Valued at US$43 billion by market cap, Datadog provides an enterprise-facing monitoring and analytics platform for developers.

In the last five years, the company has grown its revenue at an exceptional compound annual growth rate of 55%. This rapid revenue growth allowed Datadog to report free cash flow of US$715 million in the last 12 months, up from US$632 million in 2023 and US$383 million in 2022. In the June quarter, it reported free cash flow of US$144 million, indicating a margin of 22%.

In Q2 2024, Datadog increased sales by 27% to US$645 million. It ended the quarter with 28,700 customers, up from 26,100 in the year-ago period. Further, 3,390 customers generated annual recurring revenue of US$100,000 in Q2, up from 2,990 last year.

Down 35% from all-time highs, Datadog remains positioned to deliver outsized returns to shareholders in 2024 and beyond.

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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 Shopify. The Motley Fool recommends CrowdStrike, Datadog, and Docebo. The Motley Fool has a disclosure policy.

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