TSX retail stocks are staging a handsome recovery in November 2023 after declining for several months in a row. Besides the renewed broader market strength, gradually improving economic outlook and the possibility that the latest round of interest rate hikes is over could be the key reasons fueling this recovery. Given that, it could be the right time for long-term investors to add some undervalued TSX retail stocks to their portfolios.
In this article, I’ll highlight two of the best retail stocks you can buy on the TSX today and hold for years to come.
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Aritzia stock
Aritzia (TSX: ATZ) is a Vancouver-based vertically integrated design house and apparel retailer with a market cap of $2.7 billion. Even after rallying by about 13% in November so far, this top TSX retail stock currently trades at $24.29 per share with nearly 49% year-to-date losses.
Despite a difficult consumer spending environment, Aritzia’s total revenue increased by 6.8% YoY (year over year) in the first half (ended in August) of its fiscal year 2024 to $996.9 million. However, high inflationary pressures increased its product and temporary warehousing costs, driving its gross profits down by 8.6% YoY during the same period to $366.8 million.
Besides the broader market weakness, the negative impact of high inflation and a tough consumer environment could be the main reasons for hurting ATZ stock lower earlier this year. Nonetheless, as consumer inflation has already started showing early signs of cooling down, you can expect its earnings to gradually improve in the coming quarters, which should help its share prices recover fast.
Moreover, Aritzia’s fast-expanding business in the United States and growing active consumer base further brightens its long-term financial growth outlook, making it a reliable TSX retail stock to buy today and hold for the long term.
George Weston stock
George Weston (TSX: WN) is another top TSX retail stock you can consider adding to your portfolio today. The shares of this Toronto-headquartered company have risen more than 10% in November so far but still trade with a 1.4% year-to-date loss at $155.32 per share. At this market price, this retail stock has a market cap of $22.5 billion and an annualized dividend yield of 1.8%.
Loblaw Companies and Choice Properties REIT are the two main subsidiaries of George Weston, which are also listed on the Toronto Stock Exchange. Even as macroeconomic uncertainties continue to affect businesses across the globe of late, George Weston’s total revenue has grown positively by about 6% YoY in the last two quarters to $ 32.3 billion. Furthermore, the company’s adjusted earnings in these six months have jumped 12.7% YoY to $6.04 per share.
George Weston’s subsidiary Choice Properties REIT’s contractual rent collection rate increased to 99% last quarter, reflecting the strength of its strong portfolio with high-quality assets. As the macroeconomic outlook continues to improve in the coming quarters, you can expect George Weston’s other subsidiary, Loblaw’s retail business, to also post stronger financial growth, making it an attractive retail stock to buy on the TSX today.
