Seasoned investors know that the best way to grow wealth as an investor is to invest in high-quality companies when their value is low and sell them for substantial profits when they gain considerable value. Knowing this fact is one thing. It is much harder to successfully pull this off. Having a long-term view is critical to make the most of your investment capital.
The S&P/TSX Composite Index’s current volatility has resulted in many high-quality stocks trading for much lower valuations. The TSX now has several undervalued stocks waiting for investors to scoop them up for long-term profits.
Not all stocks trading for discounts from their all-time highs will deliver stellar returns decades down the line. It is important to find high-quality businesses with the potential to deliver exceptional returns for investors who have the discipline to buy and hold their investments for the long run.
If you want to take advantage of the market volatility, here are two TSX stocks value-seeking investors should have on their radars today.
Jamieson Wellness (TSX:JWEL) is a $1.55 billion market capitalization company that is a manufacturer and wholesaler of various health and wellness products, including minerals and vitamin supplements.
The onset of COVID-19 boosted the company’s operations, as people became increasingly concerned about staying healthy. As the world becomes increasingly aware of health issues and the importance of wellness products, companies like Jamieson Wellness are slated to thrive in the coming decades.
The broader market volatility has resulted in its valuation going down. As of this writing, Jamieson Wellness stock trades for $36.77 per share, down by 11.9% from its 52-week high.
Based on analyst ratings, the stock has a 12-month average target price of $45.75 per share, representing a 24.42% return potential. Despite global geopolitical tensions and issues in the broader economic environment, Jamieson Wellness could deliver the expected returns.
The company’s revenues from the first half of fiscal 2022 saw a 3% year-over-year jump. Its net earnings increased by 13% in the same period. Its cash from operations surged by 161% year over year in the second quarter of 2022. With its recent acquisition of Nutrawise, Jamieson Wellness looks well positioned to boost its revenues and long-term profitability.
Aritzia (TSX:ATZ) is a $5.38 billion market capitalization Canadian women’s fashion brand based in Vancouver. The company designs apparel and accessories for its collection of exclusive brands, selling them under its banner. Its primary markets are in Canada and the U.S., generating most of its revenue through retail sales, followed by its e-commerce segment.
Aritzia has been rapidly growing its sales for several years, even managing to keep up its pace through the pandemic. The initial setback from lockdowns was short-lived, because Aritzia quickly pivoted to bolster its e-commerce sales.
The company’s fiscal 2022 ended in February. Between fiscal 2017 and 2022, Aritzia saw its sales grow by around 124%. Its gross profits grew by almost 150% in those five years, and its net income surged from a loss in 2017 to a gain of over $150 million by the end of fiscal 2022.
Its expansion into the U.S. and its growing e-commerce presence has positioned it well for stellar long-term growth. As of this writing, Aritzia stock trades for $47.31 per share, down by almost 22% from its 52-week high. Based on analyst ratings, Aritzia has a 12-month average price target of $58.97, representing a return potential of 24.64%. It could be an excellent addition to your portfolio.
Finding stocks trading for discounts is important, but it is even more crucial to identify and invest in businesses that can significantly grow their operations in the coming years. The Canadian benchmark index is down by 11.94% from its 52-week high. Almost all stocks across the board are trading for lower valuations.
Jamieson Wellness stock and Aritzia stock can be excellent investments if you want to capitalize on discounted valuations and long-term growth potential.