How to Use Your TFSA to Double Your Annual Contribution

Given their higher-growth prospects and continued expansions, these two TSX stocks can deliver superior returns, thereby helping investors in doubling their TFSA contribution room sooner.

Key Points
  • Celestica and MDA Space offer strong long-term growth potential, driven by increasing demand for AI-integrated data center infrastructure and expanding opportunities in the global space economy, respectively.
  • Both companies are strategically positioned to capitalize on favorable industry trends, with Celestica investing in advanced manufacturing capabilities and MDA Space expanding through strategic acquisitions, making them suitable for TFSA investors with higher risk tolerance seeking substantial returns.

A Tax-Free Savings Account (TFSA) is one of the most effective tools for building long-term wealth. It allows investors to earn tax-free returns, including capital gains and dividends, on eligible investments up to the contribution limit. For 2026, the Canada Revenue Agency has set the annual TFSA contribution limit at $7,000. Meanwhile, Canadians who were at least 18 years old in 2009 and have never contributed to a TFSA have a cumulative contribution room of $109,000.

Another key advantage of a TFSA is that any amount withdrawn is added back to the contribution room on January 1 of the following year. As a result, generating strong investment returns can effectively increase the value of future contribution room. For example, if a high-growth stock doubles in value inside a TFSA, the larger withdrawal amount can be recontributed in a future year without triggering taxes.

However, this strategy also carries a higher risk. Growth stocks often have evolving business models and are more susceptible to market volatility. A sharp decline in their share prices, followed by a sale, can erode capital and permanently reduce the TFSA’s contribution room. Therefore, investors with a higher risk tolerance may consider the following two high-growth stocks, which I believe have the potential to deliver strong returns over the next three years while enhancing long-term TFSA wealth.

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.

Source: Getty Images

Celestica

Celestica (TSX: CLS) provides critical data centre infrastructure and advanced manufacturing solutions that support artificial intelligence (AI), cloud computing, hybrid cloud, and other next-generation technologies. As businesses increasingly integrate AI into their core operations and governments and consumers adopt AI-powered applications, demand for high-performance computing infrastructure continues to rise. In response, hyperscale cloud providers are expanding their AI-ready data centre capacity, creating a strong long-term growth opportunity for Celestica.

To capitalize on this favourable backdrop, the company continues to invest in innovative product development and expand its manufacturing capabilities. It is also building a new production facility in Fort Worth, Texas, to support growing demand for next-generation data centre infrastructure and advanced technology solutions.

Reflecting these favourable industry trends and its growth initiatives, management expects revenue and adjusted earnings per share (EPS) to increase by 53.3% and 67.8%, respectively, this year. Backed by its strong financial performance, robust growth outlook, and exposure to one of the fastest-growing technology markets, I believe Celestica is well-positioned to deliver attractive long-term returns, making it an excellent addition to a TFSA.

MDA Space

Another growth stock that could help investors grow their TFSA over the long term is MDA Space (TSX: MDA), which provides advanced technologies and services across the global space economy. Growing demand for satellite-based connectivity and space robotics, rising government spending on national security and defence, and increasing investment in space exploration are creating a powerful long-term tailwind for the company.

According to the Satellites to be Built and Launched report, approximately 40,000 to 50,000 satellites could be launched between 2025 and 2034. Of this opportunity, around 20% to 30% falls within MDA Space’s addressable market, while roughly 5% is already reflected in its active sales pipeline. In total, the company has identified a project pipeline worth approximately $40 billion over the next five years, highlighting its significant long-term growth potential.

To strengthen its competitive position, MDA Space is expanding through strategic acquisitions. Last month, it completed the acquisition of Blue Canyon Technologies, a U.S.-based manufacturer of small spacecraft and satellite systems. The company is also working to acquire Collecte Localisation Satellites, a provider of AI-driven Earth observation services and satellite-based Internet of Things (IoT) solutions, thereby broadening its capabilities and customer offerings.

The company is also investing aggressively in future growth, with planned capital expenditures of $225 million to $275 million this year to expand production capacity and accelerate chip development initiatives. Supported by these investments, management expects revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to increase by 10% and 7%, respectively, this year. Given its robust project pipeline, strategic acquisitions, expanding production capabilities, and favourable industry trends, I believe MDA Space is well-positioned to sustain long-term growth and deliver attractive returns for investors.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Celestica and MDA Space. The Motley Fool has a disclosure policy.

More on Tech Stocks

diversification and asset allocation are crucial investing concepts
Tech Stocks

I’m Considering Buying More Blackberry Stock Right Now – Here’s my Take

Blackberry stock is posting record results as its QNX segment continues to gain momentum and operating leverage.

Read more »

woman looks at iPhone
Dividend Stocks

RESP or RRSP? Where Should Your Next Contribution Go?

RESP grants can make the first education contribution attractive, but retirement savings shouldn't disappear while parents fund their children.

Read more »

Illustration of data, cloud computing and microchips
Tech Stocks

In 5 Years, Celestica Stock Has Gained More Than 4,000%, and Analysts Are Still Bullish

Celestica has been a phenomenal stock over the last five years, but future gains depend on the company meeting high…

Read more »

crisis concept, falling stairs
Tech Stocks

Tech Stocks Tumble After AI Leaders Urged a Slowdown: Time to Buy Shopify or Celestica?

With growing calls for a slowdown in the development of AI, here's how two of Canada's best tech stocks, Shopify…

Read more »

Canadian investor contemplating U.S. stocks with multiple doors to choose from.
Tech Stocks

1 of the Most Overlooked Stocks on the TSX Right Now

This TSX stock’s falling share price may be getting more attention than the strength of its underlying business, making it…

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Dividend Stocks

Thomson Reuters Is a Sneaky AI Play, and Its Stock Popped Earlier This Month

Thomson Reuters is an AI play, building AI into tools legal and tax professionals already use. See why TRI stock…

Read more »

AI image of a face with chips
Dividend Stocks

AI Needs More Than Chips: These Canadian Stocks Have Something it Needs

AI data centres need far more than processors, creating opportunities in natural gas and electrical infrastructure.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Tech Stocks

TFSA vs. RRSP: Which Should You Max Out First?

Not sure whether to max out your TFSA or RRSP first? Your tax bracket holds the answer. Here's how to…

Read more »