It was not easy to be a growth investor during the rapid rise in interest rates. With rate cuts on the horizon and hopes for a soft-ish landing for Canada’s economy in 2024, one can’t help but stand by the top growth plays. If you’re a young investor seeking to build serious wealth over the next 10–20 years, I think growth is a must.
That said, being a growth investor does not mean you chase momentum and “hot” narratives at the expense of the fundamentals. I don’t care if you consider yourself a growth investor with a strong appetite for risk; you must always pay special attention to the valuation. Why? Even today’s growth heroes can be a horrible bet if you pay too much.
Growth investor or not, you must put in the due diligence beforehand
When you shop at your favourite electronics store, you don’t immediately go for the absolute best OLED television set without even looking at the price tag. Instead, you’d probably check prices, compare models, and try to find the best value for your money. When it comes to television sets, people seem more than willing to put in the homework. But when it comes to stocks, many new investors may be guilty of not giving the valuation process nearly as much time or effort.
If you’re going to invest many hours into researching which television is the best bet for your $3,000 budget, why wouldn’t you put even more hours into your next $10,000 stock purchase?
The more we start thinking about stocks as pieces of merchandise and not just numbers on a screen, the sooner new investors, I believe, can get a grasp of investing. Whether you’re on the hunt for a company with the means to grow market share or a firm that’s cyclical in nature, I believe that everyone should strive to get bang for their buck in the world of investing.
In this piece, we’ll look at one growth darling that’s down around 40% from its all-time high. Indeed, the multi-year drop seems more or less exaggerated. More recently, shares have rocketed higher. I think the rip marks the start of a new bullish upswing. So, if you’re looking for growth at a reasonable price, look no further than shares of Aritzia (TSX:ATZ).
Aritzia stock: Growth and value, together as one!
Aritzia stock made headlines this week after blowing away its quarterly sales estimates. Just last week, shares shot up more than 38%. The big Thursday pop was followed by a huge 9% upward move in the following session. Undoubtedly, investors got too pessimistic about the clothing retailer. And now, it’s the bulls that are back in the driver’s seat.
For months, I’ve been pounding the table on Aritzia stock as shares sagged to multi-year lows. Though last week’s move shined a bright light back on the firm, I view it as a great value pick for those who believe in the brand and its growth story.
I’m not a fan of chasing rallies, but given ATZ stock is still well off its highs, I do believe shares have a realistic chance of sustaining a rally toward the $50 range by year’s end. The analyst upgrades are coming in, and fast. Though it’ll be harder for the firm to keep up the pace of beats, I do think a turning of the Canadian economy could mean big things for the apparel giant as it moves forward with its comeback.
Aritzia is back. Value-focused growth investors, take notice!
