2 TSX Stocks I’d Buy With a $6,500 TFSA Contribution

The Tax-Free Savings Account (TFSA) is a boon for Canadians, because it allows full compounding of your money. Which means the full returns generated inside your TFSA, be it a capital gain, interest, or dividends, will likely be tax free throughout the holding period and even at withdrawal. This year’s TFSA contribution limit is $6,500. Listed here are two TSX stocks you’ll be able to consider for TFSA investment in 2023.

Baytex Energy

Canadian mid-cap energy stock Baytex Energy (TSX:BTE) is a growth-oriented name. Though it has lost 15% within the last 12 months, it has gained nearly 1,000% for the reason that pandemic.

Baytex Energy has a diversified asset base, with almost 50% of the full production coming from the U.S. Eagle Ford shale basin. After its Ranger Oil acquisition announcement last month, Baytex now expects to supply nearly 160,000 barrels of oil equivalent per day.

While it seemed Baytex was focusing more in its more lucrative Clearwater play, this expansion within the Eagle Ford actually enhances its light oil production and is anticipated to enhance the company’s breakeven price. Note that light oil obtains a much higher price than heavy oil and, thus, helps boost revenues.

Like its TSX energy peers, Baytex Energy saw stellar free money flow growth and a remarkable debt reduction last 12 months. Such fundamental improvements will likely create shareholder value in the long run.

Baytex Energy reported free money flows of $649 million in 2022, representing an honest 63% 12 months over 12 months. It’s due to its higher production and comparatively higher prices that drove such financial growth.

Debt reduction stays a fundamental goal for Baytex, because it intends to allocate 50% of free money flow toward it when the cope with Ranger closes. So, given its improving balance sheet and handsome earnings growth prospects, Baytex Energy stock looks like an appealing bet for long-term investors.

B2Gold

Gold stocks have come down significantly this 12 months on the expectations of an extended and better interest rate-hike cycle. But a number of the TSX gold miner stocks appear to have hit bottom and will have a limited downside. One in every of them is B2Gold (TSX:BTO). It has lost 15% up to now this 12 months.

Gold miner stocks rallied within the fourth quarter of 2022, following the yellow metal, on easing inflation and expected slowing pace of rate hikes. When benchmark rates of interest rise, Treasury yields also gain in tandem, turning yellow metal relatively unattractive. Because of this, we saw capital moving to Treasuries, as rates rose last 12 months.

The bullion and TSX gold miner stocks won’t please investors, no less than for the subsequent few months. Nonetheless, they may likely turn higher later this 12 months on easing macroeconomic challenges. BTO stock looks particularly attractive, given its discounted valuation, superior dividend yield, and stable earnings growth prospects. Its strong production profile and low-cost structure will likely boost its financials and create value in a high-price environment.

The post 2 TSX Stocks I’d Buy With a $6,500 TFSA Contribution appeared first on The Motley Idiot Canada.

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• Time for Defence: Spend money on a Volatile Market
• 3 Canadian Stocks You Can Buy for Less Than $20
• TFSA Stocks: 3 Solid Options for February 2023
• 2 Top TSX Energy Stocks That Could Beat Vermilion Energy

The Motley Idiot recommends B2Gold. The Motley Idiot has a disclosure policy. Idiot contributor Vineet Kulkarni has no position in any of the stocks mentioned.