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.
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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.
