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Air Canada Stock: Should You Buy it With Your 2022 TFSA Contribution Limit?

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An airplane on a runway
An airplane on a runway

Written by Kay Ng at The Motley Fool Canada

Air Canada (TSX:AC) stock remains a hot topic, as Omicron cases increase. The rising cases are probably pressuring the stock in the last week. In any case, the airline stock is losing momentum and altitude. I wouldn’t bet against Air Canada, though. It was an airline with one of the best balance sheets going into the pandemic.

Although it continues to navigate through a super-challenging operating environment, and it took on excessive debt as a result, Air Canada could receive assistance from the government, as it has in the past, if it needs it. However, it would be a risky move to consider the stock for your TFSA contribution limit of 2022. We don’t know how long the pandemic will continue to be a drag on COVID-affected stocks. Moreover, its debt levels are staggering no matter how one looks at it.

Therefore, if you’re interested in AC stock, consider taking a small position in your taxable account. Leave your 2022 TFSA contribution limit of $6,000 for stocks that provide greater growth. If you like capital gains, you should consider these growth stocks.

Lightspeed stock

It’s an understatement to say Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) is under pressure. It has declined almost 70% from its 52-week and all-time high, leading analysts to believe that it could double investors’ money over the next 12 months from the current levels. Specifically, from about $51 per share, 14 analysts have a consensus price target that suggests an appreciation of 141% in the near term.

Pandemic impacts should make Lightspeed’s point-of-sale and e-commerce offerings more essential and relevant to brick-and-mortar businesses. In the last 12 months, its revenue more than doubled by rising 159% to US$389 million. At best, though, the results are mixed, because the company also reported a net loss of US$193 million.

As recent as September, the market accepted a high valuation based on LSPD stock’s high revenue growth. If it can keep up with growing its revenue at a superb pace, maybe the market will wake up and push the growth stock higher.

Some analysts would say that Lightspeed is a speculative stock, because it hasn’t posted profits yet. If so, you can consider Shopify (TSX:SHOP)(NYSE:SHOP) stock instead.

Shopify stock

Shopify stock has also corrected from its 52-week and all-time high but not nearly as much as LSPD stock. Specifically, the growth stock has fallen about 22% from its high. Analysts project SHOP stock can climb about 21% over the next 12 months from the current levels.

Shopify has established a solid position in the e-commerce marketplace. Its revenue growth has been above average — rising 71%, in the last 12 months to US$4.2 billion. Importantly, it has been profitable since 2017. In the trailing 12 months, it reported net income of US$3.4 billion, which was boosted significantly by unrealized gains on its equity investments. Its EBITDA was US$516 million.

Lightspeed and Shopify both have little debt weighing on their balance sheets, which should make it easier for them to take flight as they expand their businesses.

The post Air Canada Stock: Should You Buy it With Your 2022 TFSA Contribution Limit? appeared first on The Motley Fool Canada.

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The Motley Fool owns and recommends Shopify. The Motley Fool recommends Lightspeed Commerce. Fool contributor Kay Ng owns shares of Lightspeed Commerce and Shopify.

2022

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