2 Overlooked Mid-Cap Stocks With Promising Growth Potential

Aritzia (TSX:ATZ) and Jamieson Wellness (TSX:JWEL) stocks are mid-cap gems on the TSX Index right now.

| More on:
analyze data

Image source: Getty Images

So much for the Santa Rally, with the S&P 500 tanking back into bear market territory (a 20% fall from peak levels) last week. Undoubtedly, many investors like to set their sights on seasonal rallies and all the sort, even if they’re based on nothing but arbitrary data points. Sometimes, Santa Claus comes to town, but other times, it’s the Grinch that steals Christmas. In any case, the holiday season makes for some pretty interesting headlines.

Long-term investors shouldn’t base their buying or selling moves based on something as arbitrary as the month. Even if history suggests a period has a higher chance of positive returns, most market participants are already aware, rendering a period of seasonal strength less actionable for investors seeking to make a quick buck.

Indeed, history is re-writing itself all the time, and unprecedented events need to be accounted for. While a lack of gains in the final trading week of a year isn’t unprecedented (the bear market of 2018 saw ugly results during the holidays), I think the best thing investors can do amid the holiday selling season is to treat any dips as gifts, courtesy of Mr. Market.

Nobody knows if they’re timely gifts. However, for those with a long-term mindset, prospective returns will get higher with every percentage point a security price drops. In the mid-cap universe, there’s a greater chance of having a name trading well below its intrinsic value. Why? Few investors are looking. With so much attention focused on the large and mega caps, it’s not a mystery that some of the lesser-loved mid-caps could offer way more in terms of value in tough market conditions.

Consider shares of Aritzia (TSX:ATZ) and Jamieson Wellness (TSX:JWEL).


Aritzia is probably one of my favourite mid-cap growth stocks out there. Many young Canadians are likely very familiar with the Aritzia brand.

The company is looking to expand its presence south of the border with hopes that American consumers will share a similar degree of brand affinity for the firm’s wears. Aritzia’s mild expansion has been met with pretty decent results. Now, I have no idea if the company’s push will propel the Canadian chain by leaps and bounds in the U.S. apparel scene.

Regardless, I wouldn’t at all be shocked to see ATZ stock join other American apparel companies in the S&P 500 at some point over the next 10-15 years. Aritzia has created a brand that may know no borders. In that regard, I view the stock as a disruptor in the retail industry. A recession will be a setback. However, I think Aritzia stock is deserving of a premium price tag. Shares go for north of 30 times trailing price to earnings (P/E).

Jamieson Wellness

Jamieson Wellness is a vitamin maker that’s also an intriguing brand. The firm has its sights set on China, where there’s a middle-class boom.

A recession will delay next-level growth. However, I think Jamieson can continue to make moves to improve its positioning for the post-recession world. The firm is reinvesting in its business to create innovative new products. The vitamin maker could make a big splash in protein, as millennials and boomers look to higher-protein offerings to improve their overall health.

At the end of the day, Jamieson has a strong brand and promising growth prospects. Let’s not forget about the defensive nature of vitamins and minerals. At 29.4 times trailing P/E, JWEL remains a top mid-cap grower for the long run.

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.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aritzia. The Motley Fool has a disclosure policy.

More on Investing

Doctor talking to a patient in the corridor of a hospital.

TFSA: Healthcare Dividend Stocks Are Perfect for Passive Income

Top healthcare dividend stocks like Extendicare Inc. (TSX:EXE) and others can provide huge passive income in your TFSA.

Read more »

TFSA and coins
Tech Stocks

TFSA: Invest in These 2 Stocks for a Legit Chance at $1 Million

Are you interested in building a $1 million portfolio? Invest $20,000 in these two stocks!

Read more »

edit Person using calculator next to charts and graphs

The Top TSX Stock on My Watch List Right Now

Here's why Alimentation Couche-Tard (TSX:ATD) remains a top TSX stock that long-term investors seeking growth and yield will want to…

Read more »

Hourglass projecting a dollar sign as shadow

3 Stocks to Add to Your TFSA ASAP

Given their stable cash flows and solid underlying businesses, these three stocks are excellent additions to your TFSA in this…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Woman has an idea

5 Stocks You Can Confidently Invest $500 in Right Now

Consider putting your surplus cash in these stocks for stellar capital gains.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »