Should You Buy the Dip or Take Profits in These 3 Growth Stocks?

It may be time to take profits at Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) and others and wait out April on the sidelines.

think, plan, and act to work towards your financial goals

Recent volatility in Canadian and U.S. stock markets should inspire investors to reflect on their portfolios as we look ahead to April. There is the potential for a number of surprises as NAFTA negotiations reach the eighth stage in Washington and the Bank of Canada sets up for yet another rate decision. Many analysts have pointed to global trade tensions as a catalyst for the stock sell-offs in March and February.

Today, we are going to look at three stocks that have been top performers on the TSX dating back to the middle of last year. Should investors take profits and retreat to the sidelines or bet on a spring and summer rally?

Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS)

Canada Goose stock fell 3.19% on March 28. Shares have climbed 6.8% in 2018 thus far, but the stock has dropped over 9% week over week. In spite of a very positive fiscal 2018 third-quarter report, Canada Goose stock was pummeled in early February before rebounding in March. One concern for analysts was the lack of supply that had reared its head in the holiday shopping season.

In a recent interview with Reuters, CEO Dani Reiss said that Canada Goose planned to ramp up production going forward and increase profit margins. Canada Goose reported a gross margin of 63.6% in the third quarter, and adjusted EBITDA climbed 43.2% year over year to $94.7 million. The high-end winter clothing manufacturer has also posted impressive growth in its direct-to-consumer business.

Although the company looks healthy going forward, Canada Goose is entering its slow season in terms of sales, and the stock has surged over 140% since its IPO in March 2017. Canada Goose stock is likely to face more volatility in the spring and summer, and it may be wise for investors that stepped in last year to take profits today.

Aurora Cannabis Inc. (TSX:ACB)

Aurora stock dropped 5.25% on March 28. Shares have entered the red for 2018, as the broader Canadian cannabis market faces renewed volatility. Aurora stock has more than tripled since October 2017, but its move into the single digits will likely entice investors. It is the largest cannabis producer in the world after recent acquisitions, and its capacity will be crucial as demand is expected to challenge suppliers in the late summer and early fall. Add Aurora for the long term, but expect continued volatility in the cannabis market in the spring.

Shopify Inc. (TSX:SHOP)(NYSE:SHOP)

Shopify dropped 5.22% on March 28 and has shed over 15% week over week. Shares took a major hit after the stock price breached $200 and news of the Facebook Inc. data scandal hit investors. To add to its worries, short seller Andrew Left of Citron Research has again targeted Shopify. Left has said that Facebook’s revised data policies will negatively impact Shopify’s merchant base going forward.

Left’s newsletter sent Shopify stock below $120 back in October 2017. That was in the midst of a strong rally for the TSX. Although I am bullish on Shopify’s business model long term, this campaign comes at an inopportune time, and its stock is at risk of an even steeper correction heading into April.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Facebook. Tom Gardner owns shares of Facebook and Shopify. The Motley Fool owns shares of Facebook, Shopify, and SHOPIFY INC. Shopify is a recommendation of Stock Advisor Canada.

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »