How I’d Allocate My TFSA Contribution to Canadian Value Stocks This Year

You can maximize your returns by allocating your $7,000 TFSA contribution for 2025 in these value stocks providing both growth and dividends.

The $7,000 Tax-Free Savings Account (TFSA) contribution room is a good opportunity to invest in Canadian value stocks and hold them for the long term. This year, Trump tariffs created uncertainty and bearish momentum in the first half, a nirvana for value seekers. However, a 90-day tariff pause in April 2025 revived most stocks, and now trade negotiations have further moved stocks upwards. If you missed the April 2025 value window, do not worry. There are still a few Canadian value picks that have not yet recovered from the headwinds. 

Blocks conceptualizing Canada's Tax Free Savings Account

Source: Getty Images

Descartes Systems stock

Descartes Systems (TSX: DSG) is down 15% from its February 2025 high of $175. This dip is partially seasonal and partially due to tariff uncertainty. The logistics and supply chain management company sees strong activity from e-commerce clients during the holiday season, which drives fourth-quarter revenue. The company helps people and businesses trade goods and services, comply with customs, track routes, manage inventory, and more.

The uncertainty created by tariffs has delayed many clients’ major trade decisions, slowing trade activity. Once this tariff uncertainty ends and trade resumes, Descartes could see a recovery in the revenue growth rate. Until that time, its zero debt and $175 million cash reserve can help it enhance its offerings and be prepared to help companies navigate trade complexities with ease. As long as its platform remains relevant for trade execution, Descartes’s share price will grow.

On the valuation front, Descartes is not exactly cheap as it trades at a 49.5 times forward price-to-earnings (P/E) ratio. The company has been growing its earnings per share (EPS) at a compounded annual growth rate (CAGR) of 19.8% for the last 10 years. While the 49.5 times ratio might be expensive for one year, it is cheap when you look at the next five-year growth story.  

Telus Corporation

Telus Corporation (TSX: T) is another value stock to consider as the telco revives its fundamentals. The Canadian telecom sector is undergoing a structural change, from an oligopoly market to a competitive market. While big names like Telus still maintain their market share, they no longer have exclusive access to the fibre infrastructure they built. Competitors can lease the network and offer services at a lower cost. This regulatory change has brought a structural change in the business model. Telus has shifted from pouring billions into building fibre infrastructure to accessing new markets on competitors’ networks.

Telus has adjusted its dividend growth rate to reflect the change. It now expects to grow dividends by 3–8% for the 2026-2029 period from 7–10% in 2025.

The company is capturing good market share, although its average revenue per share (ARPU) remains stressed. The current competition will prevail as new policies reduce the number of immigrants, the key source of new subscriptions for Telus. The stock has recovered from below $20 and can reach $28 as 5G increases income-generating opportunities. T stock is trading at a higher forward P/E ratio of 21.1 times, but the stock has just begun to recover.

Now is a good time to lock in a 7.5% dividend yield, before the stock price rallies and normalizes the dividend yield.

Hive stock

The above stocks are value stocks not because their valuation ratio is low, but because their growth potential is high. However, Hive Digital Technologies (TSXV:HIVE) is a value stock for its lower valuation and future growth potential. Its market cap of $492.3 million is below its enterprise value of $500 million. The company is investing heavily in capacity expansion and plans to achieve a 25 Exahash per second (EH/s) capacity by December 2025.

Hive expects to earn US$400 million in revenue, a fourfold increase from US$105 million in FY25, at the 18EH/s capacity. It also expects its high-performance computing business to grow tenfold to US$100 million in annual recurring revenue from US$10 million in FY25. With such strong growth prospects, a 2.5 times price-to-sales ratio is an attractive valuation.

The market has not yet priced in this growth amidst bitcoin volatility and economic uncertainties. Once the 25 EH/s capacity starts reflecting in the revenue, Hive stock could surge past $6, from $3 at present.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group and TELUS. The Motley Fool has a disclosure policy. 

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