The S&P/TSX Composite Index lost nearly 3% of its value in the third quarter of 2023, trimming its year-to-date gains to less than 1%. The possibility of more interest rate hikes and slowing economic growth are two of the main reasons driving Canadian stocks downward lately. On the positive side, recent big losses have made many fundamentally strong stocks look way too undervalued to buy for the long term. That’s why it could be the right time for you to consider adding some quality stocks to your portfolio at a big bargain.
In this article, I’ll highlight two of the best TSX growth stocks you can buy in October 2023, even with a small upfront investment of $5,000.
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Aritzia stock
Aritzia (TSX:ATZ) is my first stock pick for October 2023. The shares of this Vancouver-headquartered apparel retailer tanked by nearly 36% in the September quarter, making them look even more attractive than before. ATZ stock currently trades at $23.63 per share with 50.1% year-to-date losses and a market cap of $2.6 billion.
Last week, on September 28, Aritzia announced the financial results for the second quarter of its fiscal year 2024 (ended in August 2023). During the quarter, its total revenue rose 1.7% from a year ago to $534.2 million, exceeding Street analysts’ estimate of around $520 million. Despite continued weakness in consumer spending, the company’s expanding presence in the United States is helping it beat analysts’ top- and bottom-line growth. This was one of the key reasons why Aritzia managed to deliver an adjusted net profit of $3.4 million last quarter against analysts’ expectations of a $4.2 million loss.
Although Aritzia’s management expects macroeconomic factors to affect its revenue and gross margin in the third quarter, its consistent focus on further strengthening its presence in the United States market and growing e-commerce business makes its long-term growth outlook look bright. Given that, its recent big declines could be an opportunity for long-term investors to buy this top Canadian growth stock at a bargain.
Kinaxis stock
Kinaxis (TSX:KXS) is another growth stock on the Toronto Stock Exchange that looks cheap to buy in October 2023 after shedding more than 19% of its value in the September quarter. This Ottawa-headquartered cloud-based supply chain management solutions provider currently has a market cap of $4.4 billion as KXS stock trades at $153.18 per share with a minor 0.8% year-to-date gain.
Despite macroeconomic challenges and a tough global business environment, Kinaxis registered a 30.9% YoY (year-over-year) growth in its second-quarter revenue to US$105.8 million. During the quarter, the company witnessed a record number of customer wins, and its subscription business also showcased strength. As a result, its adjusted earnings for the quarter jumped 78.6% YoY to US$0.25 per share.
In its latest earnings report, Kinaxis’s management highlighted how it continues “to see a persistent urgency to transform supply chain management practices,” even as the global economic growth outlook remains cautious. This trend reflects that the company has the potential to continue growing even in an uncertain economic environment, making this Canadian stock very attractive to buy on the dip in October 2023.
