2 Top TSX Growth Stocks to Stash in a TFSA for Life

These two growth stocks may not be the top in the last month, but in the last few years, they have shot straight up with no slowing down.

| More on:
Piggy bank with word TFSA for tax-free savings accounts.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to choosing growth stocks for a Tax-Free Savings Account (TFSA) that can stand the test of time, Dollarama (TSX:DOL) and Constellation Software (TSX:CSU) shine brightly. Both have delivered impressive financial performance for years. Today, let’s look at why these remain top choices.

Created with Highcharts 11.4.3Dollarama + Constellation Software PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Dollarama

Dollarama stock, Canada’s favourite one-stop shop for affordable essentials, consistently outperforms in the retail space. The company’s recent second-quarter results for fiscal 2025 reveal just how strong Dollarama’s financial foundation is. Net earnings per share came in at $1.02, beating analysts’ expectations, alongside a 7.4% increase in net sales to $1.56 billion. Consumers are flocking to Dollarama for low-priced essentials, and this demand, coupled with improved gross margins at 45.2%, shows that Dollarama stock is both financially stable and strategically positioned for growth.

Dollarama’s success isn’t new. Over the past decade, the stock has risen approximately 810%, underscoring its consistency in delivering shareholder value. This growth is largely thanks to its adaptability and strategic expansion, particularly in Latin America, through its majority stake in Dollarcity. This stake, along with Dollarama’s upcoming plans to enter the Mexican market by 2026, adds a layer of international growth that further strengthens its long-term potential.

The future for Dollarama looks bright. Analysts expect earnings growth of around 9.8% per year and revenue growth of 6.4%, thanks to Dollarama’s keen strategy of delivering everyday essentials that appeal to consumers across income brackets. As Dollarama continues to grow its footprint domestically and abroad, it remains a solid choice for any TFSA aimed at long-term, tax-free growth.

CSU stock

Constellation Software stock, a name synonymous with excellence in acquiring and managing niche software companies, is another powerhouse growth stock. In its recent third-quarter earnings report, Constellation showed a 20% increase in revenue, totalling $2.54 billion, while net income came in at $164 million. Much of this growth stems from Constellation’s tried-and-true strategy of strategic acquisitions, which accounted for a good portion of its recent revenue rise.

Constellation has a legendary growth history. Since going public in 2006, its stock has delivered a staggering 20,233% in capital gains. Equating to an average compound annual return of nearly 35% over 18 years. This track record of delivering solid returns is a testament to Constellation’s savvy acquisition model and its management’s consistent ability to identify valuable companies that add to its bottom line.

Looking ahead, Constellation’s growth strategy remains focused on acquisitions. Recently, the company raised US$1 billion to strengthen its capacity for further expansion. Analysts predict a 40.1% growth in Constellation’s earnings per share over the next five years, highlighting the promising outlook for this software giant. Constellation’s diversified portfolio of software companies across multiple industries also makes it a particularly resilient choice, even in a changing economic landscape.

Foolish takeaway

Combining Dollarama stock and Constellation stock in a TFSA has several advantages. First and foremost, any growth or dividends earned are completely tax-free within the account, allowing investors to fully benefit from both companies’ impressive track records without tax implications eating into returns. Furthermore, these two companies operate in very different sectors, providing built-in diversification that enhances portfolio stability and risk management.

These stocks are also ideal for TFSAs because their history of consistent performance aligns well with a long-term strategy. With Dollarama’s steady growth driven by affordable essentials and Constellation’s expansion through valuable software acquisitions, investors have the potential to build a tax-free nest egg with less need for constant adjustments.

Should you invest $1,000 in Constellation Software right now?

Before you buy stock in Constellation Software, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Constellation Software wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Stocks for Beginners

dividends grow over time
Stocks for Beginners

The Top Canadian Stocks to Buy Right Away With $4,000

If you only have $4,000 to invest, then these Canadian stocks are some of the best options out there.

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

Man holds Canadian dollars in differing amounts
Stocks for Beginners

Cash Is King? Think Again During Today’s Market Dip

Sure, cash is great, but during a market dip investors may want to consider using some of the cash to…

Read more »

grow money, wealth build
Stocks for Beginners

How I’d Build a $15,000 Portfolio for Income and Growth With Canadian Value Stocks

Looking for some Canadian value stocks to buy without breaking the bank? Here's a trio to consider buying this month.

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

calculate and analyze stock
Stocks for Beginners

Stagflation Survivors: An Investment Strategy for Today’s Market Dip

During the market dip, there are ways to keep yourself safe and settled. So, let's get into them.

Read more »

dividends can compound over time
Stocks for Beginners

Inflation Fighters and the Opportunity to Buy the Dip

Inflation continues to be a struggle, but there are ways to battle during this market dip.

Read more »

trends graph charts data over time
Stocks for Beginners

Recession Stocks Are Back: Time to Buy the Dip This April?

During a recession, it's the best idea to go with stocks that have long-term opportunity ahead -- like these two.

Read more »