When it comes to investing north of the border, Canadians have a significant advantage to start building and growing wealth at a rapid pace. Having an investment account like the Tax-Free Savings Account (TFSA) is a massive opportunity to buy stocks for the long run and earn huge returns as they gain in value since we don’t have to pay any tax on the investments.
Taxes play a significant role when it comes to investing. Not only do they eat into a large chunk of your gains, which causes the rate that your capital compounds at to slow down, but it also makes many investors consider the tax implications of an investment well before they even own the stocks.
With a TFSA, you don’t have to worry about that, though. Not only do you know that you won’t pay tax on any Canadian stocks, making the stock selection for your portfolio much easier, but it also allows your capital to compound even faster over the long run.
So, if you’re looking to add some high-quality stocks to your portfolio with your $6,500 contribution for 2023, here are three of the best to consider today.
A top recovery stock to buy for your TFSA
With the film industry releasing tonnes of blockbusters this year, there’s no question that one of the best stocks Canadian investors can buy for their TFSA today is Cineplex (TSX:CGX).
Cineplex has been ultra-cheap since the pandemic hit. So now that the pandemic is well in the rearview and the film industry has finally begun to recover, Cineplex has a massive runway for growth, both to recover to its pre-pandemic operating capacity and continue to expand in the future.
Throughout 2023, many major studio films have opened, including this past weekend with both Barbie and Oppenheimer. And going forward, several more are set to be released this year.
So with Cineplex trading at just over $9 a share and 9.1 times its estimated 2024 earnings, it’s easily one of the best stocks to buy for your TFSA today.
Plus, in addition to its recovering theatre operations, Cineplex’s entertainment venues are also seeing a rapid recovery, giving the stock significant potential to continue growing for years to come.
A top Canadian retail stock
Another excellent stock to buy for your TFSA, especially in this economic environment, is Dollarama (TSX:DOL), the ultra-popular discount retailer.
While Cineplex stock is one of the cheapest on the market, Dollarama trades with a significant growth premium. However, after growing at a compounded annual growth rate of more than 20% for over a decade now, Dollarama certainly deserves the premium it trades at.
So although Dollarama stock may seem a bit expensive, it’s also one of the best stocks to buy and hold in this environment since, in addition to its growth potential, it’s also highly defensive.
The worse off the economic environment the more incentive consumers have to turn to Dollarama, making the stock one of the best you can buy for your TFSA today.
Not only can it grow your capital significantly over the long haul, but it can also help to protect it in the short term, which is why Dollarama stock is a top pick for your TFSA today.
An ultra-cheap growth stock to buy now
Another ultra-cheap stock to buy now that you’ll want to strongly consider adding to your TFSA today is Aritzia (TSX:ATZ), the popular women’s fashion retailer.
As the economic environment has worsened and many worry about the impact it has on discretionary spending, retailers like Aritzia have been selling off consistently.
In fact, Aritzia now trades more than 50% off its all-time high, offering investors an excellent entry point to a stock that’s traded with a major growth premium over the last few years.
In fact, at the start of 2022, Aritzia stock traded at a forward price-to-earnings (P/E) ratio of more than 42 times.
Meanwhile, now that it faces temporary headwinds and its stock has fallen by more than 50%, Aritzia trades at a forward P/E ratio of just 24.5 times, making it one of the best stocks you can buy for your TFSA today.
