Investing in quality growth stocks and holding them in a Tax-Free Savings Account (TFSA) is a proven strategy to generate outsized gains that are sheltered from Canada Revenue Agency taxes. The maximum cumulative TFSA contribution room in 2025 has increased to $102,000. While Canadian investors should allocate a majority of their funds towards diversified low-cost index funds, those with a high-risk appetite should consider gaining exposure to profitable growth stocks.
Typically, growth stocks deliver market-beating returns during bull runs and have the potential to accelerate your retirement timeline by a few years. So, let’s see how a $20,000 TFSA could grow to $100,000 by 2030.
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Hold this TSX stock in your TFSA right now
Valued at a market cap of US$151 million, Electrovaya (TSX: ELVA) is engaged in the design, development, manufacture, and sale of lithium-ion batteries, battery management systems, and battery-related products for energy storage and other specialized applications in North America.
Electrovaya operates Infinity battery cell technology, comprising both low- and high-voltage systems. It also operates solid-state battery technology.
Analysts tracking ELVA stock expect it to increase revenue from US$44.6 million in fiscal 2024 (ended in September) to US$231 million in fiscal 2029. In this period, its free cash flow is forecast to improve from less than US$1 million to US$76.6 million.
Wall Street expects the company to benefit from economies of scale and increase its free cash flow margin from 2% in 2024 to 33% in 2029.
If ELVA stock is priced at a trailing FCF multiple of 15 times, which is quite cheap, it will be valued at US$1.2 billion in early 2030. This means a US$11,000 investment in ELVA stock today could be worth over US$83,000 in 2030.
Analysts remain bullish on the TSX stock and expect it to gain 66% over the next 12 months.
The bull case for this TSX stock
Valued at a market cap of $1.4 billion, Propel (TSX: PRL) is a fintech company that operates in the financial lending space. It facilitates access to credit products, including installment loans and lines of credit, under the brands MoneyKey, CreditFresh, and Fora Credit.
Analysts tracking Propel stock expect it to increase revenue from $450 million in 2024 to $919 million in 2027. Its top line is expected to surpass $1.1 billion by 2029. Analysts also expect adjusted earnings per share to increase from $1.64 in 2024 to $4.50 in 2029.
Today, PRL stock trades at a trailing price-to-earnings multiple of 18.4 times, down from its average multiple of 22.5 times. If the TSX stock is priced at 16 times forward earnings, it will trade around $72 in 2030, indicating an upside potential of over 100% from current levels.
So, a $9,000 investment in PRL stock today could grow to $18,000 within the next five years. Analysts remain bullish on the TSX stock and expect it to gain 18% over the next 12 months, given consensus price targets.
Investors should consider identifying other growth stocks, such as PRL and Electrovaya, and further diversify their portfolios, which helps lower overall investment risk.
