The Tax-Free Savings Account (TFSA) allows Canadians to generate tax-sheltered returns. So, the registered account’s tax-sheltered status should be leveraged to create outsized gains, making it ideal to buy and hold quality growth stocks.
The TFSA contribution limit in 2025 has increased to $7,000, which can be used to gain exposure to profitable companies growing steadily. Further, Canadians should consider investing in quality companies south of the border, resulting in portfolio diversification and lower investment risk. Here is one such U.S. stock you can buy and hold in a TFSA in February 2025.
Buy and hold HIMS stock in a TFSA
Telehealth platform Hims & Hers (NYSE:HIMS) reported a milestone year in 2024, with consolidated revenue surging 69% year over year to nearly US$1.5 billion, driven by significant expansion in its weight loss specialty and subscriber growth.
The consumer health and wellness platform aims to democratize access to personalized healthcare. By year-end, its subscriber base reached over 2.2 million, doubling its user base in just two years.
Its weight loss specialty saw particularly strong momentum. After a successful expansion in 2024, the platform now offers various options for Americans seeking support on their weight loss journeys.
HIMS reported that 70% of individuals who began compounded GLP-1 treatment through the platform continued with their subscription after 12 weeks, with users experiencing an average weight loss of 14 pounds or about 7% of their initial weight.
Operational efficiency has allowed Hims & Hers to offer oral-based weight loss solutions for as low as US$69 per month, with injectable-based treatment plans starting at US$165 per month for general customers. The company provides discounted injectable plans at US$99 per month for military members, first responders, educators, and healthcare workers.
Is HIMS stock undervalued?
Looking ahead, Hims & Hers expects its weight loss offerings, including oral solutions, liraglutide, and personalized semaglutide, to contribute at least US$725 million in revenue in 2025.
Hims & Hers is also preparing to expand into new specialties. With recently acquired laboratory capabilities and the acquisition of at-home testing provider Trybe Labs in early 2025, Hims & Hers plans to extend its platform to address conditions such as sleep disorders, low testosterone, and menopausal support.
In the last 12 months, HIMS stock has surged roughly 300%. However, it is also down 40% from record levels, allowing you to buy the dip.
According to consensus estimates, HIMS’s revenue is forecast to increase from US$1.48 billion in 2024 to US$3 billion in 2027. Comparatively, adjusted earnings per share are forecast to expand from US$0.53 in 2024 to US$1 in 2027.
Wall Street also expects HIMS to end 2027 with a free cash flow of US$400 million. So, if the health-tech stock is priced at 50 times trailing FCF, it should more than double in the next three years.
The Foolish takeaway
It is not recommended to invest such a significant sum in a single stock. Instead, Canadian investors should identify other profitable growth stocks that trade at a reasonable valuation.
Moreover, it is crucial to understand that investing in growth stocks is not advisable for the average investor. You need to have a sizeable risk appetite to invest in these stocks, as valuations can pull back significantly when sentiment turns bearish. Alternatively, you can benefit from market-beating returns in a bull run.
