The persistently high interest rate environment and economic uncertainty continue to pose challenges for equity investors. Nonetheless, investors should take advantage of the reduced share prices of select high-quality Canadian stocks. It’s worth highlighting that the broader markets have demonstrated notable resilience this year. However, shares of a few fundamentally strong TSX stocks are trading at a discounted valuation, offering a compelling buying opportunity.
Further, investors should note that a favourable shift in the business environment and the alleviation of macroeconomic pressures could significantly boost the stocks of these companies. Therefore, if you are considering an investment of $1,000, consider investing in shares of Canadian corporations with the potential to deliver notable growth and the ability to outperform broader markets.
With this context in mind, here are two stocks to buy with $1,000 in November 2023.
Aritzia
Aritzia (TSX:ATZ) stock has lost nearly 55% of its value year to date. This substantial downturn in the shares of the luxury apparel design house can be attributed to a deceleration in its sales growth rate led by the tough year-over-year comparisons. Moreover, the company failed to introduce fresh and innovative product offerings that weighed on its sales. In addition, the adverse macroeconomic environment impacting consumer spending on non-essential items has continued to hurt its performance.
Nonetheless, Aritzia has reverted to its pre-established product development schedule and operates in a normalized supply-chain environment. This means that the company can create new styles to maintain freshness in its assortments, which will drive demand and its revenues. Further, Aritzia’s top-line growth will likely accelerate with new boutiques opening, as they perform well and have a low payback period. Moreover, Aritzia’s selective pricing actions, cost cuts, and opening of its new distribution centre will support its margins and profitability.
Aritzia anticipates growing its net revenue by an average annualized growth rate or CAGR (compound annual growth rate) of 15-17% through 2027. Further, its bottom line is expected to grow faster than sales. In summary, its low share price and expected acceleration in sales and earnings growth make Aritzia a compelling investment.
goeasy
Next is goeasy (TSX:GSY), which is growing its top and bottom lines at a double-digit rate, but its stock is trading at a next 12-month price-to-earnings multiple of only 7.8. This makes goeasy too cheap to ignore near the current levels. In addition, goeasy consistently grows its dividends and offers a decent yield. All these positives support my bullish outlook on goeasy stock.
This subprime lender has grown its top line at a CAGR of 17.7% since 2012. At the same time, its bottom line increased at a CAGR of 29.5%.
Looking ahead, its ability to grow the loan portfolio, steady credit and payment performance, and improving efficiency ratio will drive its revenue and earnings. Moreover, the large subprime lending market and its omnichannel offerings bode well for growth. Further, the company’s solid earnings base will enable it to enhance its shareholders’ returns through higher dividend payments in the coming years.
