2 Top Canadian Growth Stocks Perfect for Investors’ TFSAs

Here’s why Constellation Software (TSX:CSU) and Spin Master Corp. (TSX:TOY) are two top-notch growth stocks to put in your TFSA today.

| More on:

Investing in a TFSA ought to be a long-term retirement plan for most Canadians. Indeed, seeing what’s happening south of the border with capital gains tax increases should cause Canadians to shiver. Of course, when the U.S. sneezes, Canada catches a cold.

Now, it may be too soon to jump to conclusions that Canada may follow suit with capital gains tax hikes. However, the Trudeau government is borrowing money like it’s going out of style. Investors need not forget that this borrowing is debt that will need to be paid back, either today or by future generations. Accordingly, tax planning is about to get a lot more critical all over the world.

Thus, the tax-free capital gains one gets in a TFSA are more important now than ever. Here are two top growth picks I think will provide Canadian investors with some nice capital appreciation for their TFSAs over the long haul.

Constellation Software

Personally, I think Constellation Software (TSX:CSU) belongs in every TFSA.

This growth gem continues to churn out amazing results, year in and year out. Constellation does this through an impressive growth-by-acquisition strategy based on the foundation of prudent M&A investing criteria. The company is consolidating a very fragmented industry, picking the best small-cap companies up at decent valuations and growing these into impressive cash flow machines.

One might consider whether Constellation has the runway to continue this sort of growth. After all, at some point, every company will run out of companies to acquire.

That’s the beauty of Constellation’s business model. There are more companies coming to market today than can ever be acquired. Constellation has thousands of targets to pursue and chooses only the best of the best. It’s a conglomerate of wonderful magnitude, with the potential to continue growing at this rate in perpetuity.

Indeed, the company’s track record of its past 500-plus acquisitions has been stellar. I haven’t seen anything to suggest the next 500 will underperform. Accordingly, this is a growth stock that deserves attention by every TFSA investor right now.

Spin Master

Discretionary spending is set to pick up in a big way. As we come out of this pandemic, the cash savings that have piled up in recent months will be unleashed on the market. Thus, toy makers like Spin Master (TSX:TOY) represent intriguing consumer discretionary plays in this environment.

However, as I’ve mentioned before, Spin Master is more than just a toy company. It’s a children’s entertainment company. And Spin Master has been making bold moves into the digital space of late.

The company’s digital gaming segment is the key growth catalyst for this company that’s finally starting to be priced in. Spin Master posted an incredible growth rate of 400% year over year in its digital gaming segment. Popular apps such as Toca Life World have taken off with consumers, and Spin Master continues to hit home runs by providing content its user base wants.

Accordingly, I’m very bullish on the potential of Spin Master long term from a growth perspective. This is a company that holds great brands and IP. But this is also a company that’s leveraging these intangible assets across both physical and digital distribution channels. Herein lies the innovation with Spin Master.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Software and Spin Master.

More on Tech Stocks

A plant grows from coins.
Tech Stocks

3 Growth Stocks Wall Street Might Be Sleeping on, But I’m Not

Don’t miss your chance to load up on these three beaten-down stocks.

Read more »

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

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

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

money goes up and down in balance
Tech Stocks

1 “Magnificent 7” Stock I’d Buy Over Nvidia Right Now

Here's why Meta Platforms stock is a better choice for Canadian investors compared to Nvidia in November 2024.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »