The TSX Index has really heated up for the summer, with the broader TSX Index now up around 6% from its June 2023 lows. Indeed, there are few, if any, signs of froth on this side of the border, even as the artificial intelligence (AI) rally down south begins to broaden out a bit. Just because the bull seems to be back in charge does not mean it’s reckless to be a buyer for stocks right here.
Have stocks become just a tad overbought over the near term? Definitely. However, if you pick and choose your spots carefully, I do not think long-term investors need to worry about the next market correction. At the end of the day, market corrections are natural, and they should be viewed not only as great buying opportunities but as part of a healthy bull market. Indeed, I’d be more afraid to buy stocks if a market rally has gone on more than a year without so much as a 10% pullback!
Sure, you could wait for the next inevitable pullback. But there’s always a risk of missing out on the market’s next leg higher, which may be far larger than the magnitude of the next correction. That’s why I’d play both sides of the coin as markets continue to rally. Perhaps buying value plays today is a wise move, as long as you have the liquidity to buy more at a later date, potentially after the next market correction.
In this piece, we’ll check out two intriguing value stocks that could act as great bets for your long-term retirement. The following names have fallen under quite a bit of pressure of late. Even as the U.S. bull market roared out of the gate, the following names have still been in the hands of the bear.
Both firms have endured tough times, but with solid long-term fundamentals, I think each name could be positioned for an epic rally at some point down the road.
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Aritzia
Aritzia (TSX: ATZ) stock’s chart went from ugly to downright hideous following the latest post-earnings plunge. Shares of the women’s fashion retailer are fresh off multi-year lows and are down more than 55% from their all-time highs. Indeed, the spending boom of 2021 helped propel Aritzia to new heights. With a recession staring down the Canadian economy, and with inflation and other pressures hurting demand for discretionary goods, it shouldn’t be such a shocker to see Aritzia down and out at this juncture.
The bust has been painful, but little has changed about the long-term story. I still like the growth story and think it can recover from this turbulent macro environment. At 16.69 times trailing price to earnings (29.6 times forward), Aritzia certainly looks cheap as a growth play. With lower expectations in place, and mounting negative momentum, I view ATZ as a value play that may be worth nibbling on the way down.
Canada Goose
Canada Goose (TSX: GOOS) is another retailer that’s flying lower amid a challenging macro environment. The brand remains impressive, but with few major catalysts in sight, GOOS stock could remain at these depths (low $20 levels) for a longer duration.
Now, Canada Goose has pushed into new product categories. But new offerings or not, the luxury parka maker is still a discretionary stock and will feel the cool breeze of economic sluggishness.
Down nearly 75% from its high, I view GOOS stock as a deep-value option for fans of the brand.
