1 TSX Stock to Buy and Hold Forever, Especially in a TFSA

If you want one TSX stock to tuck into a Tax-Free Savings Account (TFSA) and forget, you need more than a nice chart. You need a business that can keep compounding through recessions, rate swings, and tech fads, while you keep adding fresh contribution room. Look for durable demand, strong cash generation, sensible debt, and a valuation that leaves you room for mistakes. A forever pick should also let you sleep, because the biggest TFSA killer is panic-selling at the wrong time. Track your contributions, automate deposits, and reinvest every dividend so compounding runs on autopilot while you focus on life. That’s why today, we’re looking at this autopilot option.

CGI

CGI (TSX:GIB.A) fits the “quiet compounder” mould better than most. It runs an IT services and consulting business that helps governments and large companies modernize systems, manage data, and operate critical applications. Managed services add recurring work, which can smooth results when budgets tighten suddenly. Clients sign multi-year contracts, and CGI tends to stay close to customers through local delivery teams. That model makes revenue feel steadier than many tech names when the economy cools.

The stock’s recent story has not been straight up, which actually helps long-term buyers. The shares are near the low-$120s today, with a 52-week range of $117.71 to $175.35, with shares down about 24% at writing. That drop can look ugly, but it can hand patient TFSA investors a more reasonable entry point.

Zoom out, and CGI still looks like a business that knows how to execute. It grew through acquisitions, and it keeps buying back shares when cash flow allows. In fiscal 2025, it put $1.27 billion into share repurchases under its buyback program. When a TSX stock can fund both mergers and acquisitions, and buybacks without starving operations, it usually signals a healthy engine.

Earnings support

Now, let’s discuss the earnings, as that’s where “forever” gets earned. In its fourth quarter of fiscal 2025, CGI reported revenue of $4.01 billion, up 9.7% year over year, and it delivered bookings of $4.79 billion for a book-to-bill ratio of 119.2%. It also generated $663 million of cash from operations in the quarter. Those numbers tell you demand stayed strong and cash kept flowing.

For the full fiscal year 2025, CGI reported revenue of $15.91 billion, up 8.4% year over year. It posted net earnings of $1.66 billion and diluted earnings per share (EPS) of $7.35, with adjusted diluted EPS of $8.30.It also reported a backlog of $31.45 billion, which equals about two times annual revenue. That backlog matters for a one-stock TFSA, as it adds visibility.

The next year’s outlook hinges on execution and balance sheet discipline. CGI finished a restructuring program in Q4, and management pointed to a bigger pipeline of new opportunities. It also carried higher net debt at year-end, with net debt of $3.45 billion and a net debt-to-capitalization ratio of 25.1%. That level doesn’t scare me, but it does raise the bar for continued cash flow.

Bottom line

So, should you buy and hold GIB.A forever in a TFSA? If you want a high-yield cheque each month, it will disappoint you. If you want a Canadian tech blue-chip TSX stock that can keep compounding through contracts, backlog, disciplined mergers and acquisitions, and steady cash flow, it can fit the “forever” job. The stock’s pullback over the last year gives you a better entry point than it offered near its highs. Add it, keep contributing, reinvest the dividend, and give it years, not weeks, because time does the heavy lifting here.

The post 1 TSX Stock to Buy and Hold Forever, Especially in a TFSA appeared first on The Motley Fool Canada.

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More reading

• 2 TSX Champions Poised for Exceptional Long-Term Returns
• TSX Today: What to Watch for in Stocks on Thursday, January 29
• Undervalued Canadian Stocks to Buy Now

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends CGI. The Motley Fool has a disclosure policy.