The Canadian equity market is coming back strong this year as inflation has cooled and recession fears have subsided. As of this writing, the S&P/TSX Composite Index is up by 4.62% year to date.
With the Canadian benchmark index hovering just below its latest all-time high earlier this month, many investors might wonder if they have missed the opportunity to invest in growth stocks to capture the bull market’s momentum.
While most Canadian stocks have recovered from their lows, a few fundamentally strong TSX stocks still lag behind the broader market. Trading at attractive discounts, these stocks still offer an opportunity for investors to buy the dip and leverage their recoveries for meaningful wealth growth.
To this end, I will discuss two TSX growth stocks you should consider buying before they begin soaring again.
Lightspeed Commerce
Lightspeed Commerce (TSX:LSPD) is a $2.75 billion market capitalization point of sale and e-commerce software provider headquartered in Montreal. It provides an omni-channel, commerce-enabling Software-as-a-Service (SaaS) platform to merchants.
Despite a solid performance for several quarters, the share price of Lightspeed stock has dropped by 37.55% from its 52-week high.
The substantial drop in its share prices came after the company’s leadership announced a cautious near-term outlook during the conference call for its third-quarter earnings.
Even though the company possesses strong fundamentals, the leadership is being careful considering the uncertain macro environment. The adoption of its unified payments can be a significant tailwind for Lightspeed Commerce, but so much can go wrong due to factors not under its control.
Despite the uncertainties impacting its share prices, the business itself is going strong. Lightspeed’s new go-to-market strategy, higher gross transaction volume (GTV), and consistently positive earnings before interest, tax, depreciation, and amortization (EBITDA) reflect significant growth potential.
Lightspeed is trading for $17.94 per share, which could be a good entry point for investors who want to establish a position in Lightspeed stock.
Aritzia
Aritzia (TSX:ATZ) is a $3.95 billion market capitalization integrated design house of exclusive fashion brands. Headquartered in Vancouver, it sells a variety of lifestyle apparel through various upscale retail stores across Canada, the U.S., and online.
Generating most of its revenue through retail and then online sales, Aritzia stock has suffered from the impact of lower consumer spending amid macroeconomic jitters.
The company’s year-over-year comparisons and its inability to provide new offerings have impacted its growth rate, dragging share prices down. Despite these problems, Aritzia is starting to recover from its weak position. With discretionary spending expected to increase amid reduced interest rates and cooling inflation, the company’s revenue and earnings will likely increase.
The company is expanding its boutiques, strengthening its e-commerce segment, and enhancing its brand visibility. As of this writing, Aritzia stock trades for $35.79 per share. Down by 20.25% from its 52-week high, it can deliver substantial returns with its recovery. Given the growth prospects, it can grow further and deliver more significant gains to investors.
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Foolish takeaway
Given the recent pullback in share prices of LSPD stock and ATZ stock and the overall positive momentum in the market, value-seeking investors have at least two excellent opportunities to buy on the dip. That said, the pullback might still warrant practicing a degree of caution if you decide to invest in the shares of these two TSX growth stocks.
If you have a well-balanced portfolio and want to inject growth potential into it, consider allocating some of your capital to these two arguably undervalued stocks.
