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.

| More on:
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.

young people dance to exercise

Source: Getty Images

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.

More on Investing

Canadian Dollars bills
Investing

5 TSX Stocks to Buy With $10,000 in September

With resilient businesses, solid financial performance, and visible growth opportunities, these five TSX stocks offer compelling opportunities for long-term investors.

Read more »

sleeping man relaxes with clay mask and cucumbers on eyes
Dividend Stocks

The 1 Canadian Stock That’ll Be Your TFSA’s BFF

Loblaw is a core holding candidate for a long-term TFSA. Canadians can consider dollar-cost averaging into a position over time…

Read more »

Piggy bank on a flying rocket
Bank Stocks

Why BMO Is the Only Stock I’d Hold Forever in My TFSA

Canada’s dividend pioneer is the ultimate anchor stock and forever holding in a TFSA.

Read more »

man touches brain to show a good idea
Dividend Stocks

2 High-Yield Dividend Stocks: Here’s My Take on Whether They’re Actually Good

SmartCentres REIT and Gibson Energy, for example, are two Canadian companies that offer relatively high dividend yields.

Read more »

woman looks out at horizon
Dividend Stocks

This Dividend Stock Just Dropped +9%: Is Now the Time to Buy?

Empire has a roughly 30-year track record of raising dividends. Its dividend remains healthy and growing. And it starts investors…

Read more »

diversification is an important part of building a stable portfolio
Dividend Stocks

The Canadian Dividend Stock I’d Trust for the Next 20 Years

The Canadian dividend stock from the banking sector is known for paying and increasing its dividend year after year.

Read more »

staying calm in uncertain times and volatility
Dividend Stocks

Forget the Big Banks: 2 Dividend Stocks to Buy While RBC and TD Take a Breather

Royal Bank and TD Bank stocks are trading at all time valuations. Here are two stocks I'd rather buy despite…

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Dividend Stocks

Create a Set-and-Forget Portfolio With Just 2 ETFs

Consider Vanguard S&P 500 Index ETF (TSX:VFV) and another top ETF to buy and hold forever.

Read more »