Don’t forget about small-cap Canadian growth stocks, even as most of the heat follows some of the market’s mega-cap titans. Undoubtedly, as the TSX Index’s fierce rally begins to show signs of broadening out, it’s the small- and mid-cap stocks that may be next in line to sustain a move higher.
Small-cap stocks may be perceived as riskier by new investors, given they tend to exhibit choppier moves on thinning volumes. For self-guided investors, however, such elevated levels of volatility may be a good thing for those who seek deeper value.
In this piece, we’ll check out two TSX growth stocks that I think deserve the attention of investors who are comfortable with betting on the market’s less-covered plays that may have wider moats than some of their much larger rivals.
Without further ado, consider shares of Canadian space play MDA (TSX:MDA) and Aritzia (TSX:ATZ), two mid-cap stocks that I expect offer terrific mid-cap growth at a very reasonable price right now.
MDA
Don’t look now, but MDA stock is up more than 116% over the past year. The space play may have already shot into orbit, but I still think there’s value to be had in the $1.7 billion mid-cap stock after its latest quarterly report that saw solid revenue and profit numbers. The upbeat result may be just the start as the firm looks to continue executing its growth strategy.
The recent acquisition of SatixFy, I believe, bolsters the firm’s already robust satellite business. With a nice order backlog, improving fundamentals, and increased interest in space plays over the last few years, I view MDA stock as a winner that still has what it takes to keep climbing higher over the next two to three years.
At writing, the stock goes for 36.32 times trailing price to earnings (P/E). Not exactly a dirt-cheap bargain. That said, shares look a heck of a lot cheaper based on its forward P/E multiple of 22.5 times.
Aritzia
Aritzia is a mid-cap women’s apparel firm that’s starting to see shares retreat again after hitting a local peak of around $40 back in February 2024. Undoubtedly, the consumer environment seems hostile right now, with some of the largest names in apparel retail sinking quickly.
Despite the pressures facing most industry players, I view Aritzia as a potential share taker that can thrive in the face of these headwinds. Indeed, one of the perks of having a relatively small market cap ($3.6 billion at the time of writing) is that there’s more market share to gain over competitors.
Fashion can be a tough business. There’s no doubt about that. But if Aritzia can continue growing at home and south of the border, I think earnings could re-accelerate at some point over the next two years.
For now, fasten your seatbelts for volatility, as the mid-cap apparel play is sure to experience wild single-day moves. Last Friday, shares sunk more than 3% on a downbeat day for the TSX Index. I view the weakness as nothing more than an opportunity for long-term growth investors to buy on the way down.
