3 Top Stocks to Hold in a TFSA

Investors need to be very careful about which stocks they hold in a TFSA. Here are three top stocks to hold in a TFSA.

| More on:

Making use of a TFSA can greatly accelerate your way to financial independence. As its name suggests, all of the gains you make in a TFSA are tax-free. That means if a stock goes from $10 to $100, you won’t have to worry about the CRA taking a slice out of your returns. However, it’s important to note than none of the losses you incur are eligible to be claimed as capital losses. Therefore, investors need to be very careful about which stocks they hold in a TFSA. Here are three top stocks to hold in a TFSA.

Canada’s top stock is always a solid choice

When looking for stocks to hold in a TFSA, Shopify (TSX:SHOP)(NYSE:SHOP) is always going to be a good place to start. The company has gone from being a small startup in Ottawa to a global facilitator within the rapidly emerging e-commerce industry. Shopify provides merchants of all sizes with a platform and all the tools necessary to operate online stores. Because of its ease-of-use and modular structure, everyone from a first-time entrepreneur to large-cap companies like Netflix are listed as Shopify customers.

Among the companies listed on the TSX, very few have been able to keep up with Shopify in terms of growth. In the 2020 edition of the TSX30, Shopify ranked in first place with a 1,043% gain from 2017 to 2020. Shopify stock’s performance over that period was so impressive that its gains were nearly equal to the summed total of the next three companies combined! The global e-commerce industry is expected to grow at a CAGR of 14.7% from 2020 to 2027. With a massive addressable market, expect Shopify to continue growing alongside it.

Another company poised to grow over the next decade

As mentioned earlier, the e-commerce industry is a fascinating space to invest in today. There is so much opportunity to take advantage of in that market. In fact, investors should look at more companies than just those that provide online store building services. More specifically, investors should consider payment-processing companies. Often, these companies charge a fee for every transaction processed. Therefore, companies like Nuvei (TSX:NVEI) that help merchants process transactions should see massive growth over the next decade.

Since its IPO in September 2020, Nuvei stock has performed exceptionally, gaining about 240%. In its latest earnings presentation, Nuvei reported that its Q2 revenue had increased by 114% year over year. Investors were very pleased with those numbers and pushed the stock up more than 15% the following day. Currently, Nuvei is valued at a market cap of $22.3 billion. This makes it a much smaller company than other payment processors like PayPal. However, it also suggests that Nuvei has a lot more room to grow.

Consider this exciting growth stock

Finally, investors should consider an investment in Topicus.com (TSXV:TOI). For those that are unfamiliar, Topicus was a subsidiary of Constellation Software until its IPO in February 2021. Despite the fact that Topicus now operates separately from Constellation Software, the two companies are still closely tied. Six members of Topicus’s board of directors are executives from Constellation Software. This provides Topicus with an excellent opportunity to continue learning from its former parent company.

Since becoming its own entity, Topicus stock has gained 110%. Despite those gains, Topicus is still only valued at a market cap of $5.3 billion. For comparison, Constellation Software has a market cap of more than $46 billion. If Topicus can reach a similar market cap in a decade’s time, investors will have seen massive returns.

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 Jed Lloren owns shares of Shopify and Topicus.Com Inc. The Motley Fool owns shares of and recommends Constellation Software, Netflix, PayPal Holdings, Shopify, and Topicus.Com Inc. The Motley Fool recommends Nuvei Corporation and recommends the following options: long January 2022 $75 calls on PayPal Holdings, long January 2023 $1,140 calls on Shopify, and short January 2023 $1,160 calls on Shopify.

More on Tech Stocks

investment research
Tech Stocks

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

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

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

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »