For investors looking to supercharge their Tax-Free Savings Account (TFSA) with some faster growers, there’s no shortage of names here on the TSX Index. Of course, the U.S. AI stocks and heated initial public offerings might be grabbing much of the attention of high-growth investors these days, but at the end of the day, profitability and predictability matter, perhaps more than earnings surprises against companies that already have high expectations in mind.
In any case, paying a sky-high multiple, even if it means riding on the same momentum, could accompany hefty risks. Indeed, not everyone is prepared to get caught on the wrong side of the trade when going into a company with elevated analyst price targets (it’s convenient to screen for growth companies by their consensus price targets or Street highs).
But it’s on the investor to do the due diligence and research so that one isn’t looking at a wave of slashed price targets as investors look to reduce their expectations after a sizeable fall. In this piece, we’ll consider two TSX stocks that could add a bit of heat to a portfolio positioned for growth.
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Cameco
We’ve heard non-stop chatter about the AI data centre buildout and how it’ll pave the way for a boom in energy demand. Of course, the energy producers that are scaling up are one way to play the rising demand for clean energy.
With nuclear power praised as a green solution to the power deficit facing the AI data centre buildout, perhaps more investors should look to uranium and top producers such as Cameco (TSX: CCO). Indeed, Cameco is one of the gold standards in uranium mining, and while it has had a run, gaining over 505% in five years, the shares have since slumped around 28% from all-time highs. If you believe in the nuclear renaissance, I’d treat the latest bearish plunge as an opportunity to buy.
Of course, uranium prices could be unpredictable for the next year or so, but as more nuclear plants go online over the years, demand for uranium could heat up enough to make Cameco’s seemingly frothy 82.6 forward price-to-earnings (P/E) multiple look like a deal looking back. It’s a premium producer that might be the best way for TFSA growth investors to go nuclear.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is more of a value stock than a growth play at 19.6 times trailing P/E. Still, the stock is starting to move down a parabolic curve again, one that could see shares blast past the $100 per-share mark as the firm gets back to its merger-and-acquisition ways.
With Polish convenience store chain Zabka Group now in the conversation, it feels like the Couche-Tard of old, one that wheeled and dealed, driving synergies through the roof, is about to make a return.
I’m a huge fan of Couche-Tard’s growth-by-acquisition model. And, when paired with its capital discipline as well as organic drivers, I think the name might be in for a huge correction to the upside as the firm starts driving synergies again from deals while also preparing for the high-tech age of convenience retail.
If you’ve ever been to the Montréal Couche-Tard Connecte stores, you’ll get a feel for the future and just how much more convenient the future will be for convenience retail.
Grab a Polar Pop, a chocolate bar, and chips, set it down on the counter where computer vision technologies tally up the total, tap to pay, and walk out. No waiting for a merchant, no friction, and perhaps more incentive to buy more items, given how easy it can be. As Couche-Tard consolidates the industry while rolling out such innovation, I think it’ll be tough to count the earnings growth star out of the game.
