Forget Meme Stocks: Buy This Top TSX Retail Stock Instead

Here’s why I think Aritzia Inc. (TSX:ATZ) is an overlooked retail option for investors seeking a pandemic reopening play today.

| More on:
online shopping

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The meme stock surge we’ve seen play out this year is unlike anything anyone expected. Indeed, seeing parabolic spikes across certain beaten-up sectors has made a select few investors very rich. Retail stocks have been among the most sought-after investments of late.

This makes sense, sort of. As the pandemic winds down and vaccinations wind up, it’s easy to make the case that retail stocks will boom. However, I think some retail stocks are better than others.

With Canadian retailers largely removed from the meme stock mania, I think an intriguing opportunity exists to get some of this meme stock upside at a discount. Accordingly, one of the retail stocks that’s on my radar right now is Aritzia Inc (TSX:ATZ). Here’s why I think Aritzia is an intriguing option for investors to consider today.

Aritzia is well positioned to accelerate U.S. expansion

Many Canadian investors and consumers are aware of the Aritzia brand. In Canada, this remains one of the top brands in the fast fashion space.

However, the company’s high-quality brand domestically could provide handsome international growth. At least, this is what investors are hoping for.

Aritzia has already proven its business model in key U.S. markets. The U.S. remains one of the key growth markets Aritzia has focused on in the past. With the pandemic reopening thesis in full swing south of the border, the growth potential of Aritzia in the U.S. should not be discounted.

Aritzia’s potential to gobble up global market share in its segment has maybe flown under the radar a bit. However, the company’s e-commerce outperformance hasn’t among investors of late.

Indeed, this company’s omnichannel value proposition appears to be quite convincing for investors. The retailer’s stock price has slowly and steadily increased over the past year. Investors who bought this stock in the depths of the pandemic have more than doubled up at the time of writing.

For those seeking a high-quality pandemic reopening play in the retail space, Aritizia looks like a great pick today.

Bottom line

As the global economy reopens, Aritzia’s bricks-and-mortar business should get a nice boost. However, in the meantime, the company’s e-commerce presence should provide a nice margin of safety for investors. Indeed, if the company continues to ramp up its e-commerce growth as it has during the pandemic, we could see some impressive long-term returns from these levels.

As far as retail stocks go, I think Aritzia is an overlooked option in this space. This company’s operating efficiency, margins, and e-commerce growth make this a sneaky pick that could be a long-term winner for investors who believe the retail rebound thesis is strong.

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 Chris MacDonald has no position in any of the stocks mentioned.

More on Investing

Cogs turning against each other
Investing

Top 2 Stocks That Could Beat the Recession

Recession-resistant stocks like Dollarama (TSX:DOL) should be on your radar in 2022.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

The 3 Best Dividend Stocks for Monthly Passive Income

These three dividend stocks are the best options for those seeking high passive income in the next few years in…

Read more »

clock time
Dividend Stocks

Got $10,000 to Invest? 1 Cheap TSX Stock to Buy Right Now

This top TSX dividend stock is finally on sale and has made some savvy buy-and-hold investors quite rich.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Want Monthly Passive Income? These TSX Dividend Stocks Are for You

If you want monthly passive income from TSX stocks, you have to do a little digging. I've given you a…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Bank Stocks

The Most Valuable TSX Stock Out There Is up 10% This Month!

This TSX stock is the best value stock out there, expanding even during a downturn and setting itself up from…

Read more »

ETF chart stocks
Dividend Stocks

3 International ETFs to Buy for a Diversified Portfolio

Some international markets may prove more resilient against economic downturns, and exposure to them may strengthen your portfolio during crashes…

Read more »

Payday ringed on a calendar
Dividend Stocks

TFSA Pension: 3 Canadian Dividend Stocks to Buy for Monthly Passive Income

These high-yield Canadian stocks look good to buy right now for a TFSA focused on monthly passive income.

Read more »

A worker uses a laptop inside a restaurant.
Tech Stocks

2 U.S. Stocks Canadian Investors Can Buy and Hold Forever

Blue-chip companies such as Microsoft and Coca-Cola are forever stocks that have the potential to beat the market in 2022…

Read more »