The Best Places to Put Your TFSA Contribution If You’re Focused on Growth

Meta Platforms (NASDAQ:META) is a great growth play on the cheap in a pricey market.

Key Points
  • Tech volatility could give younger TFSA investors a chance to buy top growth names at better prices, while avoiding overheated AI chip stocks that could get hit hard if rates rise.
  • Meta looks like a growth-at-a-reasonable-price pick, trading at a relatively low P/E with potential upside from new AI features, subscriptions, and future wearables.

For the younger TFSA (Tax-Free Savings Account) investors out there who want to focus a bit more on the growth side, I do think that the latest wave of market volatility hitting the S&P 500, and especially the tech-heavy Nasdaq 100, could open a window of opportunity to buy some of the most premier high-tech growth innovators at an even heftier discount.

Of course, you have to be careful about which names within the red-hot tech sector you choose to put new money into, especially since there could be a couple of bubbles floating around some of the most heated, parabolic parts of the AI economy. While I do like the prospect of AI chips over the long run, I can’t say that today’s slate of valuations makes sense, especially if we’re talking about semi firms that may already have their best days behind them. Sure, there’s real earnings growth in the rearview, and momentum could bring forth more of the same. However, let’s not ignore the degree of cyclicality when it comes to such names.

Indeed, we often see pull forwards in demand, especially in the earlier innings of a technological boom or AI revolution. To put it simply, such heated names are in a very difficult-to-predict spot. And the good news is you don’t need to participate in the run-up, especially if you have no idea how to value what’s now starting to retreat. If there’s anything that could derail the AI boom in its steps, it’s probably interest rates.

Inflation is running hot on both sides of the border, and I think rate hikes could be the pin that pricks the AI chip bubble. Of course, not every semi name is bubbly. But, for the most part, I do think that when the group goes down, even the names that don’t deserve to take a hit will end up being dragged lower.

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies

Source: Getty Images

Meta Platforms: Too cheap to pass on

At this juncture, I think your TFSA should be focused not only on impressive growers, but names that are attractively valued historically speaking. Pay attention to the price-to-earnings (P/E) multiple if you’re looking for value and growth together. One name that I think is a growth bargain is Meta Platforms (NASDAQ: META). Mark Zuckerberg’s social media, VR, and now AI empire look to be going on sale.

For some reason or another, the shares just keep taking a hit alongside the rest of tech. Now going for $570 and change, the name trades at 20.7 times trailing P/E. It’s earning quite a bit too, so looking ahead into 2027, the name looks even cheaper at around an 18.5 times forward P/E. If that’s not value, I don’t know what is. While Meta is spending a great deal to build out data centres while training its latest model, Muse Spark, I certainly wouldn’t discount the company’s potential to sell such AI features.

Indeed, Meta’s subscription might stick, especially if Muse Spark adds differentiated value to the table (I think it will). Once Meta glasses become more commonplace, perhaps AI could be the start of an incredibly sticky business, one that helps finance the future of the metaverse. All considered, Meta is a bargain and one that’s worthy of a TFSA.

Fool contributor Joey Frenette has positions in Meta Platforms. The Motley Fool recommends Meta Platforms. The Motley Fool has a disclosure policy.

More on Tech Stocks

atomic particle
Tech Stocks

Constellation Software in a TFSA: Great Business, but Is the Price Right?

Constellation’s acquisition engine appeals, while a cash-flow valuation check argues for patience.

Read more »

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.
Dividend Stocks

The RRSP Deadline Is in March: Why Starting in November Gives You the Advantage

Many investors hold stocks like Shopify Inc (TSX:SHOP) in their RRSPs.

Read more »

man studies at computer
Dividend Stocks

Here Are The 3 Canadian Stocks I’d Tell a New Investor to Buy ASAP

Discover strategies for investing in stocks that can help you thrive in a market filled with volatility and uncertainty.

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution Before 2026 Is Over

Put your $7,000 TFSA contribution to work before 2026 ends. Explore BMO, CN and Constellation Software for income and long-term…

Read more »

moving into apartment
Tech Stocks

Your TFSA Contribution Room Could Be Larger Than You Think

Shopify Inc (TSX:SHOP) stock has delivered large returns. Those who cashed out TFSA SHOP positions may have more room than…

Read more »

woman relaxes with phone
Dividend Stocks

BCE Cut its Dividend: Has the Stock Become a Better Income Investment?

BCE’s new payment offers income, but cash after spending still has to support the recovery.

Read more »

A chip in a circuit board says "AI"
Tech Stocks

Celestica Stock: Is AI Growth Worth the Risk in a Retirement Portfolio?

Celestica offers retirement growth potential, with a cash-flow trade-off that deserves more attention than sales alone.

Read more »

A person's hand cupped open with a hologram of an AI chatbot above saying Hi, can I help you
Tech Stocks

CGI vs. OpenText: Which Canadian Tech Stock Offers the Better Long-Term Case?

CGI gets my long-term preference, while OpenText offers a recovery case that still needs stronger sales.

Read more »