2 Hot Canadian Stocks to Buy This Summer

These two Canadian stocks — Aritzia (TSX:ATZ) and Shopify (TSX:SHOP)(NYSE:SHOP) — could rally this summer. Here’s why.

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As the market posted solid gains in the first half of 2021, investors are finding it difficult to pick stocks that still have the potential to go up further in the second half. The long-term fundamentals of some companies across sectors are improving with the help of reopening economies, among other factors. That’s why I expect such stocks to continue soaring in the second half, as the market rally continues. Here are two of such stocks that could soar this summer and beyond.

Aritzia stock

Aritzia (TSX:ATZ) is a Vancouver-based apparel designer and retailer firm with a market cap of $4.2 billion. Its stock is currently trading at $37.22 per share with about 44.3% year-to-date gains. The stock has consistently been rallying for the last three quarters in a row, as it has more than doubled in the last nine months.

After gaining success in the women’s apparel segment, Aritzia recently announced its plans to acquire a leading Canadian designer and manufacturer of premium athletic wear called Reigning Champ. Reigning Champ makes athletic wear for both men and women. This acquisition is likely to help ATZ expand its product range and its overall business reach.

I expect the company’s sales to reflect massive improvements in the next couple of quarters, as its sales from physical retail stores are likely to pick up amid the reopening. This could be another reason why some notable analysts from research firms like TD Securities and CIBC have raised their target prices on Aritzia stock in the last 10 days.

Aritzia is about to report its first-quarter-of-fiscal-2022 results after market close on July 13. Its stock has already risen by 23% in the last 20 days, and I expect its better-than-expected Q1 results to keep this rally going in the coming months.

Shopify stock

Shopify (TSX:SHOP)(NYSE:SHOP) stock has become one of the top performers on the TSX in the last month. The stock has yielded 30% returns in the last 30 days compared to a 4% rise in the TSX Composite Index during the same period.

Investors’ rising expectations from the company’s second-quarter results could be the reason for Shopify’s recent stock gains. While it hasn’t yet announced any specific date for its Q2 results, they are expected to be released in the final week of July. Bay Street analysts expect Shopify’s sales growth to slow down a bit in the coming few quarters after rising by 110% YoY in the first quarter this year.

Interestingly, Shopify is one of a very few Canadian companies that have consistently been beating analysts’ sales and earnings estimates in recent years. I expect its Q2 sales to pleasantly surprise investors again with the help of rising demand for e-commerce services and products. This could keep Shopify’s recently started stock rally going in the coming months.

As I have noted in some of my recent articles, SHOP stock underperformed the broader market by a wide margin in the first five months of the year. It rose by only 3% compared to more than 13% gains in the TSX Composite benchmark. That’s another reason I still find its stock really attractive to buy in the second half of the year.

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.

The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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