Retail investing in Canada is not an easy feat. You pretty much have to guess which retailers would do well, perhaps by your personal shopping experience or from asking family and friends about their experiences. Of the three stocks discussed, the first is growing incredibly fast, the second is volatile due to seasonality, and the third is a steady grower in the long run. One thing seems sure — their brick-and-mortar and e-commerce stores are working hand in hand to make sales!
Aritzia (TSX:ATZ) rallied 19% yesterday! It continued its strength from the previous quarter when it climbed about 17%. The luxury brand that designs and sells apparel and accessories for women has been making strides in North America.
Here are some highlights from its fiscal year-to-date results, which includes three quarters of performance:
- Net revenue increased by 78.1% to over $1 billion
- e-commerce revenue increased by 38.5% to $382.4 million, making up 36.4% of its net revenue
- Adjusted EBITDA climbed 436% to over $223 million
Aritzia stock has been more than three-bagger from its initial public offering price of $16 per share. At $58.87 at writing, the retailer stock trades at a blended price-to-earnings ratio of about 52 times! Can Aritzia continue to beat (or meet) high market expectations and sustain its high multiple going forward?
Canada Goose stock
Canada Goose (TSX:GOOS)(NYSE:GOOS) is an interesting high-growth retailer to consider. Brian Madden, senior vice president and portfolio manager at Goodreid Investment Counsel, has several things to say about the growth stock this week.
First, it’s volatile and attracts a lot of skepticism, especially in the United States. However, it keeps beating on sales and earnings. Second, it’s a sensational brand that has very little substitute for the products. Third, it’s under-penetrated outside our cold northern climes. Fourth, the consensus growth is sales 25% and earnings 48%. Finally, he believes the pullback is “buyable.” Looking at the historical post-earnings reactions, the stock can pop.
Canada Goose is scheduled to report its earnings results for the quarter ending at the end of December 2021 on February 3. Over the next four months, the growth stock could experience a nice rebound, as it reports its winter month results.
Across 12 analysts, the consensus 12-month price target is $59.33 per share for 43% near-term upside potential.
Canadian Tire stock
Canadian Tire’s (TSX:CTC.A) growth rate may not be as high as Aritzia’s and Canada Goose’s, but it has a track record of steady performance with above-average growth. Since 2004, the large retailer has compounded its dividend by north of 15% annually! Notably, it’s a Canadian Dividend Aristocrat that has increased its dividend for 11 consecutive years. At writing, it offers a decent yield of 2.8% that more or less keeps up with the long-term inflation rate to help investors maintain their purchasing power. To get a sense of the retailer’s recent dividend growth, its last dividend hike in November was 10.6%.