The S&P/TSX Composite Index has steadily grown over the past year, and this upward trend shows no signs of slowing down. As we head into the holiday season, certain Canadian stocks stand out for their potential to benefit from increased retail and consumer spending. This seasonal uptick in business presents a unique opportunity for investors to capitalize on higher demand, especially by acting now in October – just before the holiday shopping begins.
One key advantage for Canadian investors is the ability to hold these investments in a Tax-Free Savings Account (TFSA). A TFSA allows you to grow your money without worrying about taxes on capital gains, dividends, or interest income. This tax-free benefit can significantly enhance your overall returns, making it an effective investment tool.
Against this background, let’s look at two Canadian stocks that are screaming buys in October for your TFSA portfolio.
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TFSA stock #1
Shares of leading cargo airline company Cargojet (TSX:CJT) could be a solid addition to your TFSA portfolio in October. CJT stock is up about 57% in one year. While Cargojet stock has delivered higher-than-average returns over the past year, the accelerated demand for its services during the holiday shopping season could push the stock price higher.
Historically, the fourth quarter is a time of peak demand for Cargojet, thanks to the increase in retail activity associated with the holiday season. This seasonal uptick in business is expected to be a significant catalyst for the company’s stock price.
Beyond the anticipated seasonal demand, Cargojet’s strong fundamentals provide a solid foundation for future growth. The company has secured long-term contracts with its customers, adding stability to its operations. These contracts are supported by minimum volume guarantees with renewal options that provide visibility into future revenues. Additionally, Cargojet’s agreements include cost pass-through provisions, which help protect its profit margins amid fluctuating variable costs.
Cargojet is the only national network in Canada capable of offering next-day service to over 90% of the Canadian population. This extensive reach gives Cargojet a significant competitive edge over its peers in the courier industry.
The company is focused on reducing operational costs, optimizing its domestic network, and maintaining high service levels. These measures will likely enhance its operational efficiency, help conserve cash, and improve margins.
In summary, with strong demand on the horizon, solid fundamentals, and a focus on improving efficiency, Cargojet stock is poised to deliver stellar returns.
TFSA stock #2
Like Cargojet, omnichannel platform provider Shopify (TSX:SHOP) will likely benefit from the holiday season. Notably, Shopify’s merchants typically see a surge in gross merchandise volume (GMV) during the fourth quarter, resulting in higher revenues from merchant solutions for the company. This seasonal uptick provides a significant boost to Shopify’s overall performance.
Shopify will also benefit from the ongoing shift toward a multi-channel selling model. Further, the higher adoption of its unified commerce solutions, growing merchant base, and innovative products like Shopify Payments and Shopify Capital will likely drive GMV and gross payment volume (GPV).
In addition, the company is expanding its payment solutions in the international markets and strengthening its ecosystem.
Shopify is leveraging artificial intelligence (AI) to enhance its platform and services. Moreover, it is transitioning towards an asset-light business model and reducing costs. These measures will enable the company to consistently deliver sustainable earnings and drive its share price.
