It has been a wild year for Canadian growth stocks. Some of Canada’s best-known compounders have collapsed on worries about artificial intelligence threats. Other great Canadian growth stocks have experienced substantial rebounds and are up double digits.
There are always opportunities in the market. Sometimes you can buy on momentum. Other times, you can add to stocks that are unfairly marked down because other new shiny objects show up in the market. The point is that there is always something worth adding to, regardless of where the market is at.
Growth stocks are the ideal candidates for a Tax-Free Savings Account (TFSA) because they deliver the largest opportunity for outsized capital gains. The TFSA protects you from having to pay tax on capital gains. You want your biggest potential winners to be in the account. Here are two discounted Canadian growth stocks I’d add now for future strong returns in the TFSA.
Descartes: A top Canadian growth stock
Descartes Systems Group (TSX:DSG) has a history of strong returns. This Canadian growth stock is up 318% in the past 10 years. Yet, it is down 24% over the past year.
The stock performance masks the company’s performance. In fiscal 2026 (2025), Descartes increased revenues by 12%, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) rose 16%, and it generated $266 million of operating cash (up 21% from 2025).
In its most recent first quarter fiscal 2027, revenues rose 15%, organic revenue increased 9%, adjusted EBITDA increased 20%, and operating cash soared 40%!
Descartes offers a leading logistics network to global supply chain participants. In an increasingly complex trade and transport market, Descartes helps vendors make better choices and improve shipping outcomes.
The company has everything to like: high margins, a cash-rich balance sheet ($377 million), opportunities to grow by stealing market share, expanding products (especially in AI), and a great acquisition strategy.
Despite all of this good news, the stock is trading for its lowest valuation since 2015. In fact, it is cheaper today than it was during the depths of the COVID-19 crash. This is just the type of company (and the valuation) you want to buy and hold inside a TFSA.
Constellation: A top software stock
Constellation Software (TSX:CSU) is another strong compounder that would be a great fit for a TFSA. Its stock is up 471% in the past 10 years. Like Descartes (and many other software stocks), it has faced a substantial decline (-39%) over the past year.
Yet, like Descartes, it has been delivering stellar financial and operating results. In 2025, revenue increased 15%, cash from operations increased 24%, and free cash flow increased 14%.
In its recent first quarter, revenue rose 20%, and free cash flow increased 44%. Constellation has been very active deploying its robust cash flow into acquisitions. It added over $809 million of software businesses to its portfolio in the quarter alone.
Constellation is very well-managed. It has a great balance sheet and plenty of room for more acquisitions. It is trading at the very low-end of its 10-year valuation range right now. This stock is a real bargain right now and would be a perfect addition to a TFSA focused on big capital gains.
