2 Top Stocks to Buy in February 2023

Here are two of the best Canadian stocks you can buy in February 2023.

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

The Canadian stock market has seen a healthy recovery in 2023 so far after witnessing a big selloff, especially in growth stocks, last year. While early signs of easing inflationary pressures have driven this market rally, macroeconomic uncertainties could be far from over, as the possibility of a looming recession is still keeping investors at bay. In addition, rough corporate earnings could keep the stock market rollercoaster ride going in the short term.

These are some of the key reasons why you may want to hold some fundamentally strong stocks in your portfolio that can help you keep your risk profile low and also yield attractive returns in the long run.

In this article, I’ll highlight two of the best Canadian stocks you can buy in February 2023.

Aritzia stock

Aritzia (TSX:ATZ) is my first stock pick for February 2023 that hasn’t seen much appreciation lately, despite its improving fundamental outlook, making it look undervalued. It’s a Vancouver-headquartered design house and retailer of everyday luxury clothing with a market cap of $5.3 billion. Its stock trades at $46.55 per share after witnessing 20% value erosion in the last year.

In the first three quarters of its fiscal year 2023 (that will end in February), Aritzia’s total revenue jumped by 48.3% YoY (year over year) to $1.6 billion, as its sales across channels and geographies continue to soar. Specifically, the performance of its existing and new boutiques in the United States remained impressive. As a result, its adjusted earnings jumped by 22.7% YoY in these three quarters to $1.46 per share, despite supply chain disruptions and inflationary pressures.

Aritzia’s ability to continue posting strong growth despite these short-term challenges and its focus on strategic investments in infrastructure for long-term growth make it a great Canadian stock to buy this month.

Dollarama stock

Dollarama (TSX:DOL) could be another safe and fundamentally strong Canadian stock to buy right now. This Mont-Royal-headquartered value retailer currently has a market cap of $22.2 billion, as its stock trades at $78.09 per share with about 1.4% year-to-date losses. By comparison, the TSX Composite benchmark has inched up by 6.9% this year so far. Interestingly, Dollarama’s share prices have posted strong double-digit gains in nine out of the last 10 years, reflecting underlying strength in its business model.

Last year, many large retail businesses became a victim of macroeconomic uncertainties. However, the sales for Dollarama’s affordable products soared, as consumers looked to save money, helping it post strong financial growth. While the company is yet to report its full fiscal year 2023 results (ended in January), its adjusted earnings grew positively by 26.7% YoY in the first three quarters of the fiscal year with the help of a 15.3% increase in its sales.

As the demand for affordable products remains high in tough economic times, you can expect Dollarama’s business to keep growing steadily and profitably, even if we encounter a moderate recession in the near term. And that makes it a reliable Canadian stock to buy in February.

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

More on Stocks for Beginners

stock market
Stocks for Beginners

A Bull Market Is Eventually Coming: 1 Stock to Buy Now and Hold Forever

Investors may be uncomfortable in market downturns, but try to stay the course and focus on the long term to…

Read more »

Dividend Stocks

5 Steps to Making $500 in Monthly Passive Income in 2023

Generating monthly passive income isn't as hard as it sounds. Here are 5 steps to start making $500 every month.

Read more »

Various Canadian dollars in gray pants pocket
Stocks for Beginners

3 Passive-Income Ideas to Build Long-Term Wealth

Set up to earn multiple passive-income streams to complement your active income. Dividend stocks are an excellent way to start.

Read more »

woman data analyze
Stocks for Beginners

Got $1,000? 3 Places to Invest for March 2023

New investors should regularly save and invest according to their risk tolerance and financial goals. Here are three places to…

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

Debt-Riddled Canadians: 4 Steps to Manage Your Finances and Grow Your Portfolio

There are so many Canadians drowning in debt. Follow these steps, and you could get out of it before you…

Read more »

Man holding magnifying glass over a document
Stocks for Beginners

TFSA Investors: Make Your Recession Watchlist Now!

These long-term stocks offer immense value for TFSA investors looking to create immense returns coming out of a recession.

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Thursday, March 23

TSX stocks may remain volatile, as investors continue to assess how the high interest rate environment could affect the economy…

Read more »

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »