With top TSX stocks losing considerable value this year, now is an excellent time to go bargain hunting. If you have contribution room in your TFSA (Tax-Free Savings Account), consider adding Aritzia (TSX:ATZ), Cargojet (TSX:CJT), and Shopify (TSX:SHOP)(NYSE:SHOP) stocks to grow your portfolio over the next decade. Let’s see why these TSX stocks are poised to deliver stellar returns in the coming years.
Aritzia
Thanks to its ability to grow rapidly, Aritzia will be a solid addition to your TFSA portfolio at current levels. It’s worth mentioning that Aritzia’s revenue has grown at a CAGR (compound annual growth rate) of 19% since 2018. Meanwhile, solid sales and operating leverage have helped Aritzia grow its adjusted net income at a CAGR of 24% during the same period.
The momentum in Aritzia’s business is likely to sustain in the coming years. Its strategy to expand boutiques, especially in the U.S., will support its revenue growth, drive brand awareness, and cushion earnings. Meanwhile, its investments in its e-commerce platform, product and geographic expansion, better price mix, and expense management will support organic sales and profit.
Though Aritzia stock has recovered from the lows, it is still down about 24% from the peak. Given the correction, Aritzia stock is trading at a forward price-to-earnings multiple of 26, which is well below its three-year historical average of 32. This decline in valuation presents a buying opportunity for long-term investors.
Cargojet
Investors should consider adding Cargojet stock to their TFSA portfolio. It has consistently outperformed the broader market averages and has grown at a CAGR of over 20% in the last five years. This solid growth in Cargojet stock is backed by its robust business that is growing well.
Investors should note that despite the slowdown in e-commerce demand, Cargojet’s revenue has increased by 44.5% in the first six months of 2022. Further, its EBITDA (earnings before interest, taxes, depreciation, and amortization) and cash flows showed significant growth.
Its next-day delivery capabilities and solid domestic network provide it an edge over peers. Moreover, its ability to retain top customers, long-term contracts with minimum revenue guarantee, partnerships with leading companies, and the ability to pass costs to customers will likely drive its organic growth. Also, international growth opportunities and a reacceleration in e-commerce demand could further drive its sales and earnings.
Given the recent pullback in Cargojet stock, it is trading at a forward price-to-earnings multiple of 17, which is nearly half its historical average.
Shopify
Shopify stock has plunged over 80% from its highs amid selling in tech stocks. Further, a slowdown in its growth weighed on its stock price. Given the steep decline in its price, Shopify stock is trading at a forward enterprise value-to-sales ratio of 5.1, which is at a multi-year low.
While Shopify stock is trading cheap on the valuation front, its growth is expected to reaccelerate as its investments in growth measures are gaining traction. Meanwhile, Shopify faces easier year-over-year comparisons, which will support its growth.
With the ongoing digital shift, Shopify’s focus on strengthening its delivery and POS (point-of-sale) offerings and partnerships with top social media companies bodes well for growth.
Further, geographical expansion, the addition of new merchant services, and increased adoption of merchant solutions like Capital and POS will support its growth.
