Young Canadian investors shouldn’t let any surges in market volatility delay their entry into today’s slate of promising growth stocks. While growth plays tend to take bigger hits to the chin, as valuations contract as a part of a market pullback, I still think those with time horizons beyond five years ought to allocate a bigger chunk of their portfolios toward the firms that have the means to provide double-digit top- or bottom-line growth on any given year.
As the Bank of Canada (BoC) does its job, continuing to raise interest rates to keep driving down inflation (they’ve done a pretty good job thus far), growth stocks are sure to be a rocky ride from here. In any case, Canadian investors should treat the bumps in the road as potential opportunities. Sure, rates can be a drag on stock prices for a while longer. However, as inflation continues to retreat, the pace of rate hikes will slow. Eventually, rates will steady at a peak, and perhaps they’ll be headed lower again.
In any case, here are two TSX stocks I’d be willing to buy and hold for decades at a time. Whether rates stay higher for longer, or there’s a rapid retreat in the cards in 2024, the following names, I believe, provide young investors a great bang for their buck.
Aritzia
Aritzia (TSX:ATZ) is a fashionable women’s clothing retailer with a stock that’s been out of fashion for many months now. Undoubtedly, consumers have felt the pinch, and that’s helped pave the way for a few rough quarters for Aritzia.
At the time of writing, shares of ATZ are down more than 61% from their all-time highs. Things could get worse before they get better as the Canadian economy tests a potential recession at some point over the next year. Even if a recession proves unavoidable, I’d be willing to bet Aritzia will be able to bounce back once consumers are ready to spend again.
It’s always tough to tell when discretionaries like Aritzia are poised for a turn. Regardless, I think it’s hard to argue that there’s already some recession risk factored into the valuation. At the end of the day, Aritzia looks like a great multi-year growth story that trades like a value play at 15.5 times trailing price to earnings.
Dollarama
Dollarama (TSX:DOL) is more than just a Canadian dollar store chain; it’s one of Canada’s most impressive defensive growth stocks. The company still has plans to open new stores across the nation, and I have no doubt that most of them will be successful, especially as the economy takes a potential turn lower.
Indeed, high inflation and consumer-facing headwinds have led many Canadians to chase bargains. Whether it be at the local Dollarama or another low-cost retailer, it’s clear that Dollarama is in the right place at the right time.
Given this, DOL stock still looks too cheap to ignore at 31 times trailing price to earnings. The stock is at a new high at $95 and change. I think it has the gas to go even higher. Indeed, Dollarama can’t expand fast enough as calls for good deals grow louder!
