The recent rounds of interest rate hikes seem to be over after inflationary pressures forced central banks in Canada and the United States to rapidly increase rates for nearly one-and-a-half years. The growing possibility that central banks might soon start easing their monetary stance has given investors confidence to invest in stocks, leading to a sharp recovery in the TSX Composite benchmark. These are some of the main reasons why growth stocks have staged a handsome recovery this month after sliding for three consecutive months, driving the main TSX index up by 6.5% in November so far.
As the Canadian stock market recovery continues, I expect many cheap but fundamentally strong growth stocks to outperform the broader market by a wide margin amid an improving economic environment. Considering that, it could be the right time for long-term investors to buy such cheap growth stocks in bulk now to potentially maximize returns on their investments.
Let me quickly highlight two such TSX growth stocks that I find really attractive to buy today.
Aritzia (TSX:ATZ) is a Vancouver-based apparel designer and retailer with a market cap of $2.7 billion, as its stock trades at $24.05 per share with about 49.2% year-to-date losses. Notably, 2023 is the second consecutive year ATZ stock is witnessing weakness after staging a strong price rally in the previous four years.
In the first two quarters (ended in August) of its fiscal year 2023 combined, Aritzia reported a 6.8% year-over-year increase in its total revenue to about $997 million. However, its earnings and profitability during the same period fell partly due to increased expenses, currency headwinds, and changing consumer spending behaviour.
While it’s true that a tough consumer spending environment amid macroeconomic challenges has affected Aritzia’s financial growth in recent quarters, its consistently growing presence in the United States and expanding e-commerce business looks promising. That’s why I expect Aritzia’s revenue and earnings growth rate to improve significantly in the future as economic uncertainties gradually subside, making its stock look attractive to buy for the long term, especially when it’s down nearly 50% in 2023.
Lightspeed Commerce (TSX:LSPD) is another top TSX growth stock you can consider buying in November 2023. Although LSPD stock has advanced by 16% this year so far to currently trade at $22.42 per share, it is still down about 75% from its 2020 closing levels.
To give you a little background here, a New York-based short-seller, Spruce Point Capital, severely criticized Lightspeed in a short report released in September 2021. In its report, the short-seller made several vague allegations about the Montréal-based commerce platform provider and its management. Although these allegations didn’t majorly impact Street analysts’ recommendations on LSPD stock, they certainly affected its price movement by taking a toll on retail investors’ sentiments.
Despite facing these challenges, however, Lightspeed’s sales growth has remained strong of late, helping it gradually regain investors’ confidence. This could be the primary reason this TSX growth stock has jumped 21% in the last four weeks alone amid the growing possibility that interest rate hikes are nearly over. This rally in LSPD stock can gain further steam in the next year, I believe, if easing inflation continues to spur economic growth.