The Tax-Free Savings Account (TFSA) is one of the best places for Canadian investors looking to grow their wealth. With the benefit of tax-free earnings on interest, dividends, and capital gains, TFSAs allow for a wide range of investment options.
Historically, stocks have outperformed other asset classes over the long term, making them an excellent choice for this tax-advantaged account. If you have $7,000 to invest, consider spreading it across stocks that show strong potential. Here are two stocks that appear to be good buys right now, as they are driven by profitable businesses and still trade at reasonable levels.
Kinaxis: A leader in supply chain solutions
Based in Ottawa, Kinaxis (TSX:KXS) is revolutionizing the supply chain management landscape through innovative technology and artificial intelligence. The company's flagship product, RapidResponse, helps organizations optimize their supply chains by providing real-time data and predictive analytics.
With clients ranging from aerospace and defence giants like Lockheed Martin to consumer product leaders like Procter & Gamble, Kinaxis has established itself as a critical player across diverse sectors, including automotive, technology, and life sciences.
Despite its solid offerings, Kinaxis has seen its stock price trade within a sideways range since the pandemic-driven market surge in 2020. However, recent developments suggest that a significant upward movement could be on the horizon.
Just a few days ago, Reuters reported that a hedge fund urged Kinaxis to explore potential acquisition offers, indicating that the company could attract the attention of major investors. Regardless of the buyout potential, analysts predict 12-month upside prospects of approximately 16% from its current price of $163.91 per share, making it an attractive buy for those looking to capitalize on price gains.
Investing in Kinaxis not only positions you in a company with strong fundamentals but also taps into the growing demand for supply chain optimization solutions. As companies increasingly seek to enhance efficiency and resilience in their operations, Kinaxis stands ready to deliver. Adding the tech stock to your TFSA could provide solid returns while benefiting from the tax advantages of the account.
Brookfield Infrastructure Partners: Where stability meets growth
For investors seeking more stable returns in their TFSAs, Brookfield Infrastructure Partners (TSX:BIP.UN) may be your stock. This company operates a diversified portfolio of high-quality infrastructure assets that generate reliable cash flows. Its operations span multiple sectors, including utilities, midstream, transport, and data infrastructure, that are primarily backed by long-term contracts and regulations.
At a current unit price of $45.44, Brookfield Infrastructure Partners provides a nice cash distribution yield of 4.8%. This makes it an attractive choice for investors seeking income in addition to capital appreciation.
What sets Brookfield apart is its disciplined value-investing approach, acquiring high-quality assets that deliver strong internal growth. This strategy not only allows the company to maintain robust cash flows but also to increase its cash distribution sustainably by an anticipated 5-9% annually.
Investing in Brookfield Infrastructure Partners can offer a hedge against market volatility, as infrastructure assets tend to be less sensitive to economic downturns. Their essential nature ensures a steady demand, making them a reliable source of income. In a TFSA, this stock could serve as a cornerstone for a balanced portfolio, providing both stability and growth potential.
The Foolish investor takeaway
With $7,000 to invest, consider the long-term benefits of incorporating both Kinaxis and Brookfield Infrastructure Partners into your TFSA. Kinaxis offers exposure to the growing tech sector and supply chain optimization, while Brookfield provides stability and income through its diversified infrastructure portfolio.
Together, these stocks not only align with the advantages of the TFSA — namely tax-free growth — but also position your investments for potential appreciation in a changing market landscape. As you make your investment decisions, think of your financial goals and risk tolerance to ensure these selections complement your overall strategy.