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Another key advantage of a TFSA is that any amount withdrawn is added back to the contribution room on January 1 of the following year.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

data center server racks glow with light
Tech Stocks

AI Data Centres Need Power: This Canadian Stock Just Won a 1GW Contract

Enerflex has landed substantial data centre equipment work. The opportunity now depends on what reaches shareholders after delivery.

Read more »

man makes the timeout gesture with his hands
Tech Stocks

The Tax Rules Canadians Should Know Before Starting a Side Hustle

A side hustle can fund investments, but taxes, business expenses, and sales-tax obligations determine how much money is actually yours.

Read more »

atomic particle
Tech Stocks

This TSX Tech Stock Trades About $1,000 Below Its Consensus Target

Constellation's consensus target sits about $1,038 above its dated share price, while acquisition-driven growth determines whether the optimism is earned.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Celestica Raised Its 2026 Revenue Outlook to US$20.5 Billion: I Think the Stock Is a Buy Now

Here’s why Celestica’s growing role in AI infrastructure and its recent pullback make it one of the top Canadian stocks…

Read more »

quantum correlation
Tech Stocks

5N Plus Is Down 45% and Looks Cheap: The Price at Which it Becomes a Buy

With expanding production capacity, a robust order backlog, and favourable long-term industry trends, 5N Plus appears well-positioned for sustained growth,…

Read more »

telehealth stocks
Tech Stocks

1 Canadian Stock Down 42% to Buy and Hold Forever

This health tech stock is trading at a discount as it continues to grow and expand a business very much…

Read more »

space ship model takes off
Tech Stocks

Ottawa’s Defence Spending Boom: This Canadian Tech Stock is Already Cashing In

MDA has identifiable government and defence work, but its backlog and profit margins reveal more than the spending headlines.

Read more »

Printing canadian dollar bills on a print machine
Tech Stocks

I’d Keep Shopify for its 18% Free Cash Flow Margin

With an expanding 18% free cash flow margin and massive share buybacks, Shopify proves why it remains a top TSX…

Read more »