3 Superb Buys for TFSA Investors

Here are three top Canadian stocks to buy with your TFSA contribution this year.

You must know by now that the Tax-Free Saving Account (TFSA) is not a mere saving account. You can invest in mutual funds, GICs, corporate bonds, ETFs, and publicly listed stocks in a TFSA. If you are okay with a little volatility, stocks can give much better returns than the other options. Here are three TSX stocks that offer superior return prospects for long-term TFSA investors.

Nuvei

Canada’s fintech stock Nuvei (TSX:NVEI)(NASDAQ:NVEI) has failed to maintain its upward momentum of late. First, a short report halved the stock in December, and now, rallying Treasury yields are creating a double whammy. As a result, Nuvei stock is currently trading 56% lower than its all-time high of $180 in September last year.

Despite the recent weakness, I am optimistic about the stock. An $11 billion payment processor will likely climb back to grace, fueled by its above-average financial growth.

Nuvei provides a payment platform for merchants in e-commerce, travel, cryptocurrency, and sports betting spaces. These diversified, high-margin verticals differentiate it from its peers. The management sees above 30% revenue growth annually in the medium term.

Nuvei intends to expand its geographical presence to increase its customer base. It already operates in over 200 global markets and supports 500 payment methods and 150 currencies.

NVEI has always been a high-risk, high-growth stock. In my view, its superior historical growth and strong prospects justify the stretched valuation. I think it looks attractive at current levels after a 56% drop from the peak.

Enbridge

If you are looking for a slow-moving, relatively safer option, then Enbridge (TSX:ENB)(NYSE:ENB) could be a fitting pick. Apart from safety, its decent dividend offers a steady passive income for long-term investors.

Enbridge operates oil and gas pipelines and charges companies for shipping energy commodities. Enbridge’s earnings are not directly linked to oil and gas prices and thus, offer a relatively safer investment proposition. In addition, its stable earnings facilitate stable dividends.

It currently yields 6.5%, far higher than TSX energy stocks’ average. Enbridge has increased its dividends for the last 27 consecutive years. It could continue to pay such handsome dividends in the future as well, driven by its unique pipeline network and predictable earnings.

ENB stock has returned 25% in the last 12 months, in line with the TSX Composite Index.

Constellation Software

Very few TSX stocks have been as consistent wealth creators as Constellation Software (TSX:CSU). This $45 billion tech company has returned a massive 2,800% in the last decade, notably outperforming broader markets.

Constellation acquires, manages, and builds market-leading software companies that have a leadership position in their respective areas. Its net income has grown by a 12% compound annual growth rate in the last decade, way higher than its peers.

Picking high-potential early-stage companies that suit the company’s existing portfolio has been the forte of CSU management all these years. Constellation Software stock has fallen 10% in the recent tech turmoil driven by fears of rising interest rates.

CSU stock does not look inexpensive from any traditional valuation measures despite the fall. However, its proven, differentiated business model and strong growth prospects justify the premium valuation.

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.

The Motley Fool owns and recommends Nuvei Corporation. The Motley Fool recommends Constellation Software and Enbridge. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Tech Stocks

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

happy woman throws cash
Tech Stocks

3 Growth Stocks That Could Be Long-Term Wealth Creators

These three growth stocks aim to grow their financials at a higher rate than the industry average, thus delivering superior…

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 POET Technologies a Top AI Stock for Canadian Investors?

Canada has relatively few AI stocks, and the ones it has are different from American AI stocks in terms of…

Read more »

Rocket lift off through the clouds
Tech Stocks

2 Growth Stocks That Could Skyrocket in 2025 and Beyond

Wondering what types of stocks could rapidly rise in 2025? Check out these two stocks with substantial upside if they…

Read more »

up arrow on wooden blocks
Tech Stocks

The 3 Smartest Tech Stocks to Buy With $500 Right Now

Tech stocks can be seen as a bit risky, but these three have far less risk and more stability for…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

Shopify: A Must-Have Growth Stock for Your TFSA Now (and the Next 10 Years)

Shopify (TSX:SHOP) stock isn't just a top growth company, it's a titan worth owning in your decades-long TFSA fund.

Read more »

cloud computing
Tech Stocks

Best Stock to Buy Right Now: Manulife vs CIBC

Want the best stocks? These two are certainly the best options. But which is the better buy?

Read more »

profit rises over time
Tech Stocks

4 Reasons to Buy Constellation Software Stock Like There’s No Tomorrow

Constellation Software stock continued its climb upwards after recent earnings, and this only adds to its appeal.

Read more »