With the Magnificent Seven tech titans doing most of the muscle flexing this year (they’ve been incredibly hot), it may be wise to take a look at the other plays that may not have appreciated by nearly as much over the past year. Indeed, value-conscious investors should look beyond the high-momentum top performers in search of a better risk/reward scenario.
Going into December 2023, investors will be hoping for the so-called Santa Claus rally to come to town. Only time will tell if investors will be spoiled rotten for a second consecutive month. After a robust November of gains, I think there’s a chance that Santa may have already come and gone a month earlier.
In any case, investors should think long term and not look to get into a stock with the expectation of a quick gain over the course of a few weeks.
Going into the new year, I think mid-cap stocks could be in a spot to do pretty well, even as the economy continues to leave investors on the edge of their seats. Without further ado, let’s look at two TSX stocks I think look primed for solid results over the next two years.
Aritzia
Aritzia (TSX:ATZ) is a popular clothing retailer that’s imploded like a paper bag since peaking a few years ago. After tumbling another 4.4% on Monday’s session, shares of ATZ are now off over 60% from their all-time highs. At $23 and change, the stock seems untouchable, as consumers become less willing to splurge on the hottest fashions.
I still think Aritzia’s long-term growth profile and business model remain sound, at least from a long-term vantage point. That said, the stock could continue to sink lower, as the economic rumbles continue into yet another year.
At the end of the day, Aritzia’s a consumer discretionary that’s prone to booms (when times are good) and busts (when the economy sours). Even though the bust has happened, it could take some time before the next boom hits.
At 22.6 times trailing price to earnings, ATZ stock also doesn’t scream that it’s a bargain at current levels, in my opinion. Still, if you’re a fan of the brand and the potential from its expansion, I’d not be afraid to be a buy on the way down. Indeed, so many investors have moved on from the once-glorified high flyer.
Canada Goose Holdings
Speaking of fashionable retailers that have seen shares go out of fashion in recent years, Canada Goose Holdings (TSX:GOOS) seems to be stuck in a multi-year rut. Year to date, shares are off 34%, and down over 82% from its all-time highs. It’s hard to find anyone who’s made money in GOOS stock these days, as the perennial underperformer continues sagging in the face of a mixed economic environment.
Despite diversifying beyond outerwear, I don’t think the appetite for upscale luxury goods is about to turn until the economy can really get a shot in the arm next year. Recently, the firm bought Paola Confectii, a European knitwear supplier, a move that could help enhance its diversification efforts.
Specifics of the deal haven’t yet been released. Though it’s an intriguing move by Canada Goose, I’m not so sure if it’ll be a needle mover over the near term. In the long term, such a move could help give GOOS stock a shot in the arm, but I personally wouldn’t make too much of the deal right now.
