Investing in top Canadian stocks with strong fundamentals and solid growth potential can substantially enhance your portfolio returns over the long term. Moreover, by leveraging the Tax-Free Savings Account (TFSA), investors can further supercharge their returns as capital gains and dividend income remain completely tax-free within this account.
Against this background, here are the best TSX stocks to buy now with $7,000 (the TFSA’s 2024 contribution limit).
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TerraVest Industries
TerraVest Industries (TSX: TVK) is one of the best Canadian stocks worth buying now for its stellar growth prospects. Shares of this leading industrial manufacturer have spiked about 209% in one year and delivered an impressive return of 926.1% in the past five years. Despite the rally, it has room for growth, given its solid momentum in sales, focus on accretive acquisitions and strong demand for its services.
Notably, TerraVest’s top line rose about 34% in fiscal 2024, and the company is well-positioned to continue the momentum in the coming years. Thanks to its solid balance sheet and ample liquidity, the company will likely continue to pursue high-growth opportunities, including acquisitions, which will accelerate sales growth rate. Further, TerraVest’s focus on international markets and expansion of its product offerings will support its financials and share price. Moreover, its investments to improve manufacturing efficiency will likely support its bottom-line growth.
Thanks to its ongoing business momentum, TerraVest could continue to generate solid free cash flow per share and enhance shareholder value through steady dividend payments.
Hammond Power Solutions
Hammond Power Solutions (TSX: HPS.A), a manufacturer of dry-type transformers and power-quality products, is another compelling TSX stock to buy now. Notably, Hammond Power stock has risen about 61.8% in one year and gained an enormous 1,064% in three years.
Despite this massive rally, the momentum will likely continue as it is poised to capitalize on high-growth sectors, such as data centres, electric vehicle (EV) charging, and renewable energy. In addition to the high-growth sectors, Hammond Power has a solid competitive positioning in industries such as oil and gas, utilities, mining, and commercial construction, ensuring stability.
Thanks to its diverse portfolio and continued demand for its products, the company will likely continue delivering solid sales. Further, Hammond Power is opening new revenue streams, expanding its product line, and focusing on acquisitions, which will likely accelerate its growth and drive higher revenues. Moreover, Hammond Power’s improved operating efficiency, a favourable product mix, and solid pricing will likely fuel its margins and earnings, thereby enhancing shareholders’ returns and boosting its share price.
goeasy
Investors can also consider goeasy (TSX: GSY) stock for its stellar financials and above-average returns. Since 2013, the sub-prime lender has grown its top line at a compound annual growth rate (CAGR) of 19%, while its adjusted earnings per share have soared at a CAGR of 28.6%. The exceptional financial growth led the company to consistently increase its dividend payments and return higher cash to its shareholders. goeasy’s solid fundamentals and robust earnings growth also led to significant growth in its shares, with the stock appreciating by a stellar 1,146% over the past decade.
The company is well-positioned to sustain its ongoing business momentum as it witnesses solid loan demand. Further, omnichannel offerings, diversified funding sources, and solid credit underwriting capabilities will lead to double-digit earnings growth, supporting higher dividend payouts.
goeasy stock also appears attractive on valuation. Its price-to-earnings multiple of 8.5 indicates significant value, given its double-digit earnings growth, growing dividends, and a healthy yield of 2.9%.
