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3 Stocks That Can Make You a TFSA Millionaire

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Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

Stock market investing can be an excellent way to grow your wealth, but how you approach it can make a substantial difference in your success. While there are several ways to do it, approaching it with a long investment horizon is the way to grow your wealth meaningfully.

If you use some of the contribution room in your Tax-Free Savings Account (TFSA), you can enjoy wealth growth without incurring capital gains taxes on the growth, accelerating your journey to financial freedom as a stock market investor.

Today, I will discuss three TSX stocks that can be solid foundations for instilling growth in a self-directed TFSA portfolio on your way to becoming a millionaire in the long run.

Constellation Software

Constellation Software Inc. (TSX:CSU) is an $80.1 billion market capitalization diversified software company. The company specializes in developing and customizing software for public and private sector markets worldwide.

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As of this writing, it trades for $3,778.39 per share. While its share prices might seem steep, the company’s valuation is justified. Unlike many other tech stocks, it is considered a significantly lower-risk investment.

CSU acquires, manages, and builds vertical-specific software businesses. Instead of investing in smaller, high-risk ventures, the company focuses on acquiring and developing already successful companies with high profit margins. The software company consolidator’s focused approach allows it to achieve significant growth with every acquisition.

Cargojet

Cargojet Inc. (TSX:CJT) is a $1.9 billion market capitalization airline. While the pandemic devastated commercial passenger airlines due to travel restrictions, Cargojet stock managed to keep operations going. The company operates a domestic air cargo co-load network between several major Canadian cities and has international operations spanning the US, Mexico, and Europe.

While the pandemic caused disruptions in travel, it created a boom in the e-commerce industry, providing the tailwind Cargojet needed to soar to new heights. Between 2020 and 2022, its sales increased from $688.5 million to $979.9 million. While a challenging macro environment caused its 2023 sales to dip to $877.5 million, it remains an excellent business due to the growing e-commerce space.

As of this writing, it trades for $110.73, down by 8.1% in the last 12 months. With no capital expenditures in 2024 to weigh down its financials and a focus on cost optimization, it might be an excellent time to buy its shares today.

FirstService

FirstService Corp. (TSX:FSV) is a $10-billion market capitalization company that operates two business divisions: FirstService Residential and FirstService brands. Headquartered in Toronto, its residential business has service contracts to manage several thousand residential communities.

Its brands business segment provides property services to commercial and residential customers under several brands, generating revenue through operations in the US and Canada.

FirstService is the largest property manager in Canada, boasting over 9,000 residential communities in its portfolio. With a majority of its portfolio based in the US, FSV stock enjoys a degree of protection against headwinds in the domestic real estate sector. As of this writing, it trades for $223.34 per share, up by 5.94% year-to-date.

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Foolish takeaway

Investing in growth stocks entails taking on a degree of capital risk that every investor might not be comfortable with. Having a well-balanced portfolio can provide you with the ability to take on some risk with growth stocks.

However, not every investment with high long-term growth potential has to be an unnecessary risk. These three TSX stocks are good examples of long-term TFSA holdings you can consider for this purpose.

The post 3 Stocks That Can Make You a TFSA Millionaire appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cargojet. The Motley Fool recommends Constellation Software and FirstService. The Motley Fool has a disclosure policy.

2024