You’ve waited long enough. With the RRSP deadline just hours away, it’s time to contribute if you’ve already decided that you’re going to do so. If you’re out of investment ideas after the TSX index posted its incredible double-digit run to kick off 2019, here are two timely names that may be the perfect fit for your RRSP retirement fund.
Here’s a rags-to-riches story in the making. I’ve shunned the women’s clothing retailer in the year that followed its IPO, but after witnessing some creative marketing campaigns in combination with some promising moves made by management, I’m a believer in the company for its growth potential.
Now, Aritzia isn’t a luxury, high-fashion brand. But it’s not a discount retailer either. It’s in the middle ground, catering to young audiences like millennials with its cutting-edge designs and, most recently, its social-media-influencer-based marketing campaigns.
The most intriguing part of Aritzia for long-term investors is the fact that the company has been able to command fairly high gross margins (around 40% and on the uptrend) on the clothing it sells, meaning that the company has some pretty respectable (and likely discounted) brand equity.
Fashion risk and the discount rack have been the bane of the company’s profitability. But recently, the company has mitigated this risk by building hype through influencers to ensure the fate of a new release isn’t destined straight for the discount rack. When combined with the U.S. expansion, I think there’s a massive opportunity for the company to increase brand awareness at the international level and drive gross margins even further.
Aritzia’s fashions may be seen as high end by influencers like Meghan Markle or Kylie Jenner, but the quality of the materials themselves are far from luxurious. The result? Fat margins that could get a whole lot fatter, perhaps even fatter than the new latest Super Puff line of down-based outerwear.
Alimentation Couche-Tard (TSX:ATD.B)
Couche-Tard, like Aritzia, is a growth company that has a tremendous opportunity to further expand beyond the confines of North America. The convenience store roll-up and operator behind Mac’s, Circle K, and yes, Couche-Tard may be ready to set its sights on the southeast Asian market, where convenience store ROEs are the highest in the world.
Founder Alain Bouchard had nothing but sanguine things to say about the company’s forward-looking growth profile and the potential that lies in untapped southeast Asian markets. As we move into the latter part of the year, there are many reasons to believe that the EPS growth and the stock’s momentum could continue rocketing higher, especially if more M&A activities are conducted by the summertime.
The company has an excellent management team who couldn’t care less about driving the stock price over the short term. They’re all about driving long-term value for shareholders, even if that means pulling the breaks on M&A activities until more attractive opportunities come along.
As debt levels shrink, look for more synergy-driving deals to be announced. More specifically, Couche-Tard may be on the cusp of breaking into some southeastern markets that could fuel double-digit top- and bottom-line growth for decades to come.
Both Aritzia and Couche-Tard are stellar additions to an RRSP. If you’re looking to save for retirement, both names and their sound growth profiles could help build your nest egg at an above-average rate. And if you’ve only got money for one, I’d go with Couche-Tard because of its more proven management team and the higher degree of transparency with the company and the industry it’s in.
Stay hungry. Stay Foolish.
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Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. Couche-Tard is a recommendation of Stock Advisor Canada.