TFSA Investors: The Top Growth Stock to Outperform the Market in 2019

Aritzia Inc. (TSX:ATZ) could be the next big Canadian growth story. Here’s why the stock is a double-down on the dip.

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Aritzia (TSX:ATZ) stock was one of the few names that was in the green for 2018. The women’s clothing retailer has picked up a considerable amount of traction over the past year and a half thanks in part to a handful of the influential celebs like Meghan Markle and Kendall Jenner, who’ve publicly dawned articles of Aritzia clothing in their wardrobes with pride.

Last year, I’d noted that the Aritzia brand was really starting to sparkle thanks to Markle and the unintentional marketing boost that she provided to the Canadian brand.

“Meghan Markle was spotted dawning Aritzia products on several occasions, which was likely a huge reason why Aritzia crushed expectations for what was supposed to be a quarter of seasonal weakness. I don’t think Markle’s positive impact on the Aritzia brand will stop at a single quarter, however,” I said. “I believe Markle has put the Aritzia brand on the global map of the company’s ambitious U.S. expansion plan and that the stock could pick up a tremendous amount of traction, especially if Markle continues to treat Aritzia as one of her go-to clothiers. That’s brand attention that money can’t buy!”

Indeed, Aritzia has been on a heck of a tear thanks to a few brand endorsers, and the latest 20% drop looks like a gift courtesy of Mr. Market as we head into what could be a blowout winter season with the new “Super Puff” down jacket featuring Kendall Jenner, an influential celebrity that could spark off-the-chart demand for Aritzia’s latest offering, potentially challenging Canada Goose Holdings when it comes to women’s down-based outerwear sales.

Risk mitigation is the name of the game

As a clothier, Aritzia has a substantial amount of fashion risk. What’s hot last week may not be hot tomorrow, and what’s supposed to be hot may be destined for the discount rack upon launch. This highly unpredictable risk was a major reason why I’d urged investors to avoid the Aritzia IPO, but now that management is bringing on influencers like Kendall Jenner, the company is essentially making its product “hot” prior to launch.

If Kendall Jenner dawns the “Super Puff” jacket, it’s fashionable; no questions asked. So, investors can think of such influential celebs as giving their blessing to newly launched products, essentially allowing the company to mitigate the tremendous amount of fashion risk.

With Kendall Jenner on board, Aritzia is adding rocket fuel to its brand awareness initiatives, and as the company making its slow and steady expansion into the U.S. market, I suspect the company could be on the cusp of a huge Canada Goose-like growth spurt that’ll profoundly enrich investors over the next few years.

Foolish takeaway on Aritzia stock

Fellow Fool contributor Will Ashworth and I both hated Aritzia when it launched its IPO, and as much as we want to hate it right now, it’s really hard given the significant strides made by the company since the name hit the TSX.

Aritzia’s growth trajectory, its major PR moves, and brand awareness initiatives are paying major dividends. And should celebrity endorsements end up mitigating some of the fashion risk, Aritzia could be an ideal growth holding for your TFSA.

Stay hungry. Stay Foolish.

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 Joey Frenette has no position in any of the stocks mentioned.

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