1 Top TSX Growth Stock to Buy Hand Over Fist in 2024

Aritzia could be a must-buy TSX growth stock in 2024, showing strong recovery with the potential for sustained financial growth in the long run.

| More on:
Hand writing Time for Action concept with red marker on transparent wipe board.

Image source: Getty Images

Aritzia (TSX:ATZ) has started 2024 with a bang, as it has already risen nearly 30% this year so far to currently trade at $35.65 per share, outperforming the broader market by a big margin. By comparison, the TSX Composite benchmark has advanced by only 1% year to date from its previous year’s closing level.

After experiencing a combined value erosion of 47% in 2022 and 2023, the recent rally in ATZ stock has brought significant relief to its loyal investors. Despite the recent recovery, however, the stock has still lost 17% of its value in the last year. Does this dip still make it one of the most attractive Canadian growth stocks to consider in 2024? Before we discuss that, let’s take a closer look at some important factors that drove its share prices down last year.

A little about Aritzia’s business model

If you don’t know it already, Aritzia is a fashion designer and apparel retailer based in Vancouver that mainly specializes in women’s clothing and accessories. At the current market price, ATZ has a market cap of $3.8 billion.

At the end of November 2023, the company had 117 boutiques across North America as well as an online platform that serves customers globally. It has a loyal customer base and a strong brand identity, which has helped it achieve impressive financial growth with healthy margins in recent years.

Here’s why Aritzia stock fell sharply in 2023

Despite its strong fundamentals, Aritzia stock faced a major setback in 2023, when it plunged by more than 50% in the first three quarters of the calendar year 2023. The main reason for this decline was a slowdown in its sales growth trends due to inflationary pressures and a weakness in consumer spending.

Notably, Aritzia’s sales in the first three quarters of its fiscal year 2023 (ended in November 2023) grew positively by 5.9% YoY (year over year) to $1.7 billion. In the same three quarters of the previous fiscal year, its sales growth rate was significantly stronger at 48.3% YoY.

What’s next for ATZ stock?

While Aritzia’s sales growth in the first three quarters of its fiscal year 2023 clearly slowed on a YoY basis, we shouldn’t forget the fact that it follows significant growth in previous years. Despite macroeconomic challenges and a tough consumer spending environment, the company has managed to post stable performance across all geographies and channels in recent quarters, with continued increases in both retail and e-commerce revenues.

Aritzia’s management is also utilizing the ongoing phase of weak sales growth to expand its retail network across Canada and the United States, as well as strengthen its e-commerce presence. It’s investing in the scalability of its business, including launching an improved product assortment, accelerating real estate expansion, and making strategic investments in the e-commerce segment. These investments and strategic efforts should help Aritzia accelerate its financial growth trends in the years to come. These positive factors could continue to drive ATZ share prices higher, making it look attractive to buy now and hold for the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has positions in and recommends Aritzia. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Stocks for Beginners

Mature financial advisor showing report to young couple for their investment
Stocks for Beginners

Married Canadians: Know This Before Filing Your Taxes

Married Canadians, make sure you consider all your options before filing your tax returns! You could be missing out on…

Read more »

Dividend Stocks

This 8% Dividend Stock Pays Cash Every Month

This dividend stock has a solid present, and a strong future for investors looking to gain monthly passive income while…

Read more »

edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Dividend Stocks

How to Earn at Least $1,560 in Passive Income in 2024 With Less Than $40K in Savings

If you have $40,000 sitting around, here is exactly how you can put it away and gain at least $1,560…

Read more »

Different industries to invest in
Tech Stocks

2 No-Brainer Growth Stocks to Buy Now With $2,000 and Hold Long Term

These growth stocks have already proven their worth this year, but are solid investments for long-term holders as well.

Read more »

TIMER SAYING TIME FOR ACTION
Stocks for Beginners

Waiting for a Market Pullback With the S&P 500 at All-Time Highs? Here’s Why You Probably Shouldn’t

Time in the market always beats timing the market.

Read more »

consider the options
Stocks for Beginners

Is Telus a Buy, Hold, or Sell?

TELUS (TSX:T) stock has a lot of competition ahead of it, so even with strong free cash flow and a…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Beyond Canadian Bank Stocks: 3 Insurance Plays With Nice Dividends

Banks are great, but these three insurance stocks offer huge dividends, more diversification, and growth exposure.

Read more »

Construction work on a site
Stocks for Beginners

1 Dividend Stock Down 22% to Buy Right Now

FTT stock (TSX:FTT) recently saw a drop that could be a great opportunity for investors looking for growth over the…

Read more »