The Tax-Free Savings Account (TFSA) lets you invest in stocks and create tax-free wealth. Since the capital gains and dividends you earn aren’t subject to tax, it can enhance your overall returns, especially over the long haul. With this background, let’s explore the best Canadian stocks with fundamentally strong businesses to buy and hold forever in a TFSA.
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Cameco stock
Cameco (TSX: CCO) is an attractive stock to buy and hold in a TFSA and capitalize on the growing demand for nuclear energy. With global population growth, a higher drive for electrification, decarbonization efforts, and concerns about energy security, nuclear power is seeing renewed focus. This solid demand will likely give a significant boost to nuclear power capacity, setting up robust long-term growth potential for the sector.
As a leading nuclear fuel and power provider, Cameco stands to benefit from the growing demand. It controls the world’s largest high-grade uranium reserves, operates with low-cost production, and has investments throughout the nuclear fuel cycle, including stakes in Westinghouse Electric Company and Global Laser Enrichment. This diversified portfolio gives Cameco a competitive edge over peers and positions it well to benefit from the demand for carbon-free nuclear power.
With demand rising, pricing in North America and Europe has remained strong, supporting Cameco’s financial performance. Further, its focus on contracting activity and building a balanced portfolio augur well for growth. Cameco also targets investments in promising opportunities across the nuclear value chain, which could drive its stock higher in the long term.
Hammond Power Solutions
TFSA investors could consider adding shares of Hammond Power Solutions (TSX: HPS.A) to their portfolio. Hammond Power Solutions designs and manufactures a comprehensive range of dry-type transformers, power quality products, and related magnetic components. These products are essential to advancing electrification across various sectors, making the company well-positioned for sustained demand.
The company is consistently growing its sales and earnings led by solid demand for its products. Beyond traditional segments such as commercial construction, utilities, and infrastructure, the company is capturing significant opportunities in emerging fields like data centres, electric vehicle (EV) charging, and renewable energy. Its strategic expansion across regions, strong emphasis on new market development, and product and technology innovation will likely support its long-term growth trajectory.
The company’s bookings and backlog remain solid, creating a stable foundation for future revenue growth. Hammond’s recent strategic acquisitions have broadened its product portfolio and expanded access to original equipment manufacturer (OEM) customers, supporting further sales growth in power quality and related products. Additionally, Hammond’s strong demand for custom solutions, particularly driven by rising activity in sectors like data centres, presents further potential for long-term growth.
Hammond is committed to scaling up its large custom power transformer production capacity to meet the increasing demand. This aligns with rising project quotation activity, underscoring the long-term demand for its specialized products.
In summary, Hammond Power Solutions is an attractive investment for creating wealth in the long term. Its strong industry positioning, growing product portfolio, exposure to high-growth sectors, capacity expansion, and strategic acquisitions position it well for delivering solid growth.
