1 Canadian Value Stock You Won’t Regret Buying Today

This amazing Canadian value stock is unlikely to remain cheap for very long.

think thought consider

Image source: Getty Images

The main Canadian market index has seen a healthy recovery in the last couple of months after posting its worst quarterly losses in over two years by losing 9% of its value in June. While the recent optimism has helped many beaten-down stocks recover, some fundamentally strong stocks still look really cheap.

Such stocks might not remain cheap for very long, however, as easing inflationary pressures and continued strength in consumer confidence might help these stocks rally in the near term. That’s why it could be a rare opportunity for investors in Canada to add some of these quality value stocks to their stock portfolios to hold for the long term. In this article, I’ll talk about one of the best Canadian value stocks you can buy today.

One top Canadian value stock to buy today

When choosing a value stock to invest in, it’s important for investors to pay attention to a company’s financial growth trends and its fundamental outlook. Considering these parametres, I find Aritzia (TSX:ATZ) one of the best cheap stocks to bet on in Canada today.

This Vancouver-based company currently has a market cap of about $5.1 billion as its stock trades with about 15% year-to-date losses at $34.71 per share. While this value stock has risen by about 11% in August so far, it’s still underperforming the broader market by a wide margin year to date, making it look undervalued.

In its fiscal year 2022 (ended in February), Aritzia posted a solid 74.3% YoY (year-over-year) sales growth to $1.5 billion, exceeding analysts’ estimates. Besides its strong sales growth across channels, the Canadian apparel designer and retailer’s strong positive growth in the United States boosted investors’ confidence. These factors also helped Aritzia report an outstanding 178% YoY jump in its adjusted earnings for the fiscal year to $1.53 per share.

In the first quarter of its fiscal year 2023, the strong momentum continued in Aritzia’s overall business, as it registered a solid 65% YoY jump in its total revenue to $407.9 million. Similarly, the company registered an 84.2% YoY jump in its adjusted earnings for the quarter to $0.35 per share, crushing Street analysts’ expectation of $0.30 per share.

Strengthening outlook

Most retail companies have been facing big challenges due to the global supply chain disruptions for the last couple of years. Despite these challenges, along with inflationary pressures, Aritzia has managed its inventory and logistics remarkably well with the help of strategic inventory management. This strength is clearly visible in its recent sales growth trends.

These positive factors encouraged the company’s management to raise its fiscal 2023 revenue guidance in July. Now, Aritzia expects its sales for the fiscal year to be in the range of $1.875 billion to $1.9 billion, reflecting a 25% to 27% YoY increase.

Foolish bottom line

Continued strength in Aritzia’s business growth in the U.S. market across its retail and e-commerce channels looks promising, which has the potential to drive a sharp recovery in its stock in the coming months. That’s why long-term investors in Canada may consider buying this value stock before it’s too late.

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 recommends ARITZIA INC. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Stocks for Beginners

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

3 Millionaire-Maker Tech Stocks That Should Be on Your Radar

These three tech stocks have already proven themselves worthy, but have a lot more to prove in the near future.…

Read more »

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

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

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

The Top 3 Long-Term TSX Growth Stocks to Buy Today

These three growth stocks might be some of the best-performing stocks of the last year, but according to analysts so…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

A person builds a rock tower on a beach.
Stocks for Beginners

How to Start Investing With Just $1,000

Even just $1,000 can turn into retirement income with the right investment strategy. So, here's how to get started.

Read more »

concept of real estate evaluation
Dividend Stocks

BRE Stock: Should You Buy the 10.5% Yield?

BRE stock (TSX:BRE) offers investors the opportunity for a rebound in a real estate sector that should see high prices…

Read more »

A bull outlined against a field
Stocks for Beginners

Top 5 Sectors to Watch in a Bullish Market

Do you want growth in a bull market? These aren't just the sectors to watch but the stocks that should…

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Dividend Stocks

For a Shot at $6,228/Year in Passive Income, Buy 755 Shares of This TSX Stock

Looking for passive income? You'll need to look beyond only dividends. Which is why EIF stock could be one of…

Read more »