Yahoo Finance TFSA Investors: 1 Top Stock Primed for Performance
Written by Adam Othman at The Motley Fool Canada
While there are many differences between how the two main tax-sheltered accounts in Canada are structured, how they work, and even their goals, one thing that irks many Canadian investors about the Tax-Free Savings Account (TFSA) is the low contribution room the account comes with.
But there is a simple solution around it — i.e., solid growth stocks that can help investors undermine the impact of the contribution room via accelerated growth.
One such stock, FirstService (TSX:FSV), has offered exceptional performance since inception and, after a long correction period, looks primed for long-term bullish performance.
The company
FirstService Residential, one of the company’s two business divisions, is the largest property manager and provider of residential community and amenity services in the United States. The client portfolio includes over 9,000 residential communities—a massive slice of the total market. This also includes about 3,800 high-rise condos.
According to the last quarter’s results, that business accounts for roughly 45% of the company’s total revenues despite the fact that the company is consistently adding new communities to its portfolio. The other business that generates the larger revenue share is FirstService Brands.
It comprises eight individual businesses that provide essential property services, and the company ranks high in the individual market segments. This includes one of the largest closet companies in the U.S. (12% market share) and the continent’s largest residential and commercial painting company.
Simply put, FirstService is a giant that has yet to peak. It’s still growing, and its dominant position in multiple respective niches allows it to grow at a solid pace. The best-case scenario is that the company has years of organic growth ahead of it.
The stock
Even though FirstService is a dividend aristocrat, the least attractive thing about this stock is its dividends, thanks to a paltry yield of 0.59%. However, the dividend growth is substantial — i.e., over 51% in the last five years. That’s 10% growth annualized.
The best part about this stock is its growth potential. It was listed on the TSX in 2015, so it hasn’t even spent a whole decade on the stock market and has already gone through a major correction phase. But even if we add that to the equation, the stock has grown its investors’ capital by about 580% in fewer than 10 years.
It’s just a bit short of reaching the high point it fell from, and it may take a little pause due to an impending market crash, but that doesn’t undermine its long-term potential.
Foolish takeaway
While there is no certainty when it comes to stock, FirstService can be considered a very conservative growth pick. It has a solid business model and an impressive footprint and is experiencing decent and consistent organic growth. If it keeps on track, the stock will follow, and you might see solid returns in your TFSA thanks to this investment.
The post TFSA Investors: 1 Top Stock Primed for Performance 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 recommends FirstService. The Motley Fool has a disclosure policy.
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