Nobody can second guess the Toronto Stock Exchange’s (TSX) behaviour as it gets closer to the 20,000 threshold. Canada’s primary stock market index is on a tear of late, finishing at a record-high 19,564.10 on May 25, 2021. The TSX is up 12.22% year to date.
The environment is ripe to scoop low-priced stocks that offers long-term value. In my view, Aritzia (TSX:ATZ) and North West (TSX:NWC) are the best in the lot. The share prices should remain stable, even if the broader market experiences a pullback.
Exciting future
Market analysts are bullish about Aritzia and recommend a “strong buy” rating. As of May 25, 2021, the share price of this $3.24 billion company that sells apparel and accessories for women is relatively low at $29.17. Based on forecasts, it could soar 40.6% to $41 in the next 12 months.
Industry experts believe omnichannel’s influence will continue to help the women’s clothing retailer cement its online presence. Upscale retail stores suffered greatly due to the pandemic, although growth is very much on the horizon for Aritzia. It has 101 boutiques, but only 32.7% of the total (33 stores) are in the U.S.
Expansion in the American markets is ongoing, and management expects to add six to eight stores annually. Aritzia derives 96% of revenues from in-house labels. The competitive advantage is that these popular labels appeal to many generations. During the COVID year, e-commerce sales soared through the roof.
Aritzia’s growth should accelerate in the coming years. Likewise, the U.S. expansion is very timely, since online shopping is now the norm and safest way to order women’s clothing and accessories. The future of one of the fastest-growing Canadian companies is exciting.
Champion in remote communities
The business of the North West is strong, regardless of the market environment. This $1.77 billion retailer dominates the market in far-flung urban neighborhoods and hard-to-reach rural communities. The area of coverage is Canada, Alaska, the Caribbean, and the South Pacific.
If you were to invest today, the share price is $36.48. The consumer-defensive stock also pays a decent 3.92% dividend. As added info, NWC’s total return in the last 30.68 years is 62,016.05% (23.33% CAGR). If long-term value is what you seek from an investment, North West has it.
North West has been operating since 1688 — longer than Bank of Montreal, Canada’s oldest bank. It has a captured market in remote communities, where competition is hardly present. The business should endure for years, if not decades.
In the fiscal year 2020 (year ended January 31, 2021), the company reported a 12.6% and 66.4% increase in total sales and net earnings versus the fiscal year 2019. North West’s president and CEO Edward Kennedy said the outcome of the fiscal year 2020 was unexpected.
The reported annual sales gains were the highest of any Canadian-based retailer. Management describes the year as the most intensely active and reactive year for North West.
Long-term value
The TSX is likely to continue its impressive run and reach the 20,000 mark very soon. Meanwhile, investors should not miss out on Aritzia and North West. Buy this pair of low-priced stocks with long-term value today for higher returns in the future.
