A Tax-Free Savings Account (TFSA) is an excellent tool for building long-term wealth, as it allows Canadians to earn tax-free returns on eligible investments up to their available contribution limit. For 2026, the annual TFSA contribution limit stands at $7,000. While that amount may appear modest initially, disciplined investing and the power of compounding can help investors build substantial wealth over the long term.
For instance, investing $7,000 in stocks that generate annualized returns of more than 16% over 25 years could potentially grow into nearly $280,000. However, identifying stocks capable of delivering such strong returns over the long term is challenging. Therefore, investors should remain selective, regularly review their portfolios, and adjust their investments when necessary to maximize long-term gains.
With that in mind, let’s look at two Canadian stocks that could potentially deliver annualized returns of more than 16% over the next five years.
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Celestica
Celestica (TSX:CLS) is an electronics manufacturing services company that designs, engineers, and manufactures advanced hardware, connectivity, and supply chain solutions for customers across several high-growth industries, including hyperscale cloud computing, aerospace, defence, healthcare, and industrial markets. Supported by its exposure to rapidly expanding sectors and strong operational execution, the company has delivered exceptional returns of nearly 2,945% over the last three years at an annualized rate of 802%.
Meanwhile, hyperscalers continue to expand their AI-ready data centre infrastructure to support the accelerating adoption of artificial intelligence across industries, creating significant long-term growth opportunities for Celestica. To capitalize on this favourable environment, the company remains focused on developing innovative product offerings and strengthening its manufacturing capabilities. Last month, Celestica announced plans to establish a manufacturing footprint in Fort Worth, Texas, which should enhance its ability to meet rising demand for next-generation data centre infrastructure and advanced technology solutions.
Supported by these strong growth trends, management expects revenue and adjusted earnings per share (EPS) to increase by 53.2% and 67.8%, respectively, in 2026. In addition, amid improving demand visibility and additional program wins, the management expects even stronger performance in 2027. Given the favourable industry backdrop and the company’s ongoing expansion initiatives, I believe Celestica remains well-positioned to continue delivering strong long-term returns, making it an attractive addition to a TFSA portfolio.
5N Plus
Another Canadian stock that could deliver impressive growth in the coming years is 5N Plus (TSX:VNP), a manufacturer of specialty semiconductors and performance materials used across several high-growth industries and applications. Supported by strong financial growth and increasing exposure to rapidly expanding end markets, the company has generated remarkable returns of nearly 1,297% over the last three years.
Meanwhile, I expect the momentum in 5N Plus’s financial performance to continue, driven by strong demand for specialty semiconductors amid structural growth trends in key markets such as terrestrial renewable energy and space-based solar power. Thanks to its expertise in producing ultra-high-purity semiconductor compounds, the company appears well-positioned to benefit from these favourable industry dynamics.
To meet rising demand, 5N Plus is also expanding its production capabilities. The company plans to increase solar cell production capacity at AZUR SPACE Solar Power GmbH by 25% this year. In addition, it has received US$18.1 million in funding from the U.S. government to strengthen germanium recycling and refining operations at its St. George, Utah, facility, supporting supply chains for optics and solar germanium crystals.
Given these expansion initiatives and supportive long-term industry trends, I expect 5N Plus to continue delivering strong financial growth, which could further support its share price performance in the years ahead.
