Young Investor? 2 Excellent Starter Stocks for Your TFSA

Learn why stocks are crucial for young investors. Find strategies to thrive in both bear and bull markets with smart investments.

| More on:
Key Points
  • For young investors looking to optimize their TFSA, Descartes Systems and Topicus.com offer promising opportunities with potential for strong returns; both stocks are currently trading near their 52-week lows, providing a chance to buy at a dip.
  • Descartes Systems is positioned to benefit from a shift in global trade dynamics, while Topicus.com, despite recent management changes, continues to grow through strategic acquisitions and generates robust free cash flow, making them attractive for long-term growth and recovery.
  • 5 stocks our experts like better than Descartes Systems.

The most common asset allocation strategy for young investors is to have a higher allocation to equity. It is because equity is a relatively risky asset class, and young investors can make up for losses with active earnings. However, that is not the truth in today’s world. Many young investors are living paycheck to paycheck, with education loans and rent eating up most of their income.

While they dare to invest in crypto, they also invest in dividend stocks. What if you had a stock that gives you the assurance and resilience of a dividend stock in a bear market and the rally of a high-growth stock in a bull market? There are such growth stocks that are trading near their lows, creating an opportunity to buy them at the dip.

person stacking rocks by the lake

Source: Getty Images

Two excellent starter stocks for your TFSA

The Tax-Free Savings Account (TFSA) is the go-to account for young investors, as you invest after-tax dollars. Since your income is not much at the start of your career, you may not have significant tax liabilities, making the TFSA attractive. The account allows you to withdraw all investment income without paying tax. So, if you make a big gain on an investment, you don’t pay high tax on the invested amount, but you get high tax benefits from the withdrawals.

Here are two stocks that have a good chance of giving you strong returns in 2026.

Descartes Systems stock

Descartes Systems (TSX: DSG) stock is trading near its 52-week low as the tariff war reaches its peak. The tariff war is altering the global supply chain as countries, including Canada, are diversifying their export partner beyond America. Descartes is likely to benefit more from the shift in the global supply chain than from waiting for trade uncertainty.

It earns revenue when companies want to transport goods, services, or information from one place to another. Tariff uncertainty has affected the trade volumes. As trade volumes normalize, Descartes will be there to facilitate trade orders. Until there is clarity, Descartes’s stock may show tepid growth.

Next year may turn out to be bullish for Descartes as trade volumes resume. Hence, now is the time to buy this growth stock at the dip.

Topicus.com

Topicus.com (TSXV: TOI) is another growth stock trading near its 52-week low. Behind the dip is the resignation of Mark Leonard, founder of Constellation Software, the parent company that spun off European operations to form Topicus.com. The resignation of the founder was sudden, and investors reacted as the main asset of the company is its skill to acquire the right companies at a great valuation.

Topicus.com’s third-quarter earnings continued to show strength. This year, the company made its biggest capital investment of €417 million for acquisitions, including two large companies, Asseco Poland and Cipal Schaubroeck NV. Asseco will give Topicus.com access to large-scale public and enterprise software projects. This huge capital investment has increased its debt and pulled down return on capital in the short term as Topicus.com realizes synergies from these companies.

The valuation of Topicus has become attractive. Its price-to-equity ratio (P/E) is very high at 254.7. But the company amortizes intangible assets from its acquisitions, which reduces the earnings per share. The real value of Topicus.com lies in its free cash flow (FCF), as it acquires companies for that. A majority of its cash flow is skewed towards the first quarter, as that is when annual maintenance is due.

Topicus FCF has increased 19% in the first nine months of 2025. The company is growing at healthy rates and has the potential to double and even triple your money in the next five years.

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

More on Tech Stocks

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

MDA Space Stock: How This Canadian Company Became a Space Sector Standout

MDA Space stock combines proven Canadian technology, a $4 billion backlog, and strong growth across satellites, robotics, and geointelligence.

Read more »

trends graph charts data over time
Tech Stocks

Celestica Stock Has Been on a Roller Coaster the Past Month: What’s Going On?

Celestica stock keeps swinging wildly. Here's what's really driving the volatility, and why the AI hardware maker's fundamentals still look…

Read more »

diversification and asset allocation are crucial investing concepts
Tech Stocks

The Market Has Punished This Stock Enough: I’d Buy Before Sentiment Turns

Constellation stock faced a significant downturn this September. Discover why the market is reacting to leadership changes and tariffs.

Read more »

Rocket lift off through the clouds
Tech Stocks

Nova Scotia Just Pitched 20 Projects to the World, and 1 Stock Could Win Big

Nova Scotia brought a menu of “investment-ready” mega projects to global capital, and MDA Space offers a TSX-listed way to…

Read more »

space ship model takes off
Tech Stocks

Canada’s Aerospace Boom is Taking Off: Here’s the TSX Stock to Buy Now

Canada’s aerospace boom is being fuelled by a new wave of defence spending, and Bombardier could be a direct TSX…

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

Celestica Stock Has Basically Doubled in the Past Year: Is It Too Late to Buy?

While dilution and a potential slowdown in AI spending remain risks, Celestica’s diversified business offers some protection.

Read more »

AI image of a face with chips
Tech Stocks

Celestica Stock: Why This AI Data Centre Play Just Topped the TSX for a Second Straight Year

Celestica stock has delivered an extraordinary three-year run, driven by surging demand for AI and data-centre infrastructure. Despite its massive…

Read more »

moving into apartment
Tech Stocks

Why Shopify Stock Has Earned a Permanent Spot in My Portfolio

Find out why Shopify remains a key e-commerce player despite setbacks and evolving market dynamics. SHOP deserves a permanent spot…

Read more »