30-Year-Olds: Stop What You’re Doing and Start Your TFSA Catch-Up

Alimentation Couche-Tard (TSX:ATD) could be a huge winner as it gets going on M&A again, making it a top TFSA pick.

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Key Points
  • At 30, the priority is starting early and using the TFSA to invest (not speculate), because time and compounding matter more than trying to chase the hottest AI/IPO names.
  • Alimentation Couche-Tard (ATD) is framed as a “boring growth” TFSA idea, with upside from renewed M&A (like the proposed Zabka deal), potential synergies, and a valuation that still looks reasonable for its growth runway.

Given the high cost of living and stagnant wages, it could be difficult to top up that TFSA in any given year. And while there’s no rush for a 30-year-old who’s looking to pad their nest egg, I do think that the earlier one starts investing with their TFSA, the better.

Indeed, time is perhaps one of the most powerful advantages in the investment world. When you’re so far off from an expected retirement date, you can take on more risk with generational growers that older investors closing in on retirement might not be able to (or at least not with a big chunk of the portfolio).

Whether you’re looking to contribute more so that you can make up for lost time (do check in on your exact contribution room so that you’re not at risk of going over the limit and getting penalized for that) or looking to growth stocks for some appreciation within a TFSA, 30-year-old investors should have a plan of execution.

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Invest, don’t speculate with TFSA funds

In this piece, we’ll look at a few stocks that I think can help jolt a TFSA portfolio’s capital gains potential. When it comes to growth, it’s not all about the red-hot AI or tech names that your friends can’t stop talking about. Sure, it’s fun and exciting to talk about Elon Musk’s latest rocket company. At the same time, though, most of the early entrants have lost money.

As most other investors bet on rockets and AI, I think it makes more sense to consider some of the less-exciting names that have been left behind and still stand to benefit from the rise of the AI revolution or other tech-driven trends.

Alimentation Couche-Tard

So, what kind of names can help your TFSA grow at a decent rate without having to run the risk of steep capital losses that you won’t be able to harvest to offset losses elsewhere in other accounts? I think a boring name like Alimentation Couche-Tard (TSX: ATD) stands out. Convenience retail might not be as exciting as rockets, but when you look at the chart, the latest parabolic past-year move certainly seems like the name is on the launch pad for a rocketing of its own.

The company recently inched higher on news of the firm’s intent to buy Polish convenience store chain Zabka in a deal worth more than $8 billion. Indeed, it’s a big M&A deal and one that could entail considerable synergies. What’s most exciting about the move, in my opinion, is more about what Zabka can teach Couche-Tard, as the convenience retail landscape shifts.

Indeed, CEO Alex Miller has shown a willingness to learn and adapt to become a better chain. Given that growth mindset and the reignition of the M&A engine, my guess is that Couche-Tard could face a vicious upside re-rating. The stock trades at 19.7 times trailing price-to-earnings (P/E), which is too low, given the growth acceleration potential as the firm gets organic (think new merchandise and frictionless checkout tech) and inorganic growth going at the same time.

Fool contributor Joey Frenette has positions in Alimentation Couche-Tard. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

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