The equity market remained resilient and trended higher over the past year despite concerns about a recession. Meanwhile, moderation in inflation and an expected rate cut will likely push the stock markets higher in 2024.
Against this background, let’s look at five incredible Canadian stocks to buy in May 2024. These companies have strong fundamentals, solid growth prospects, and the potential to deliver above-average returns in the coming years.
Aritzia
Shares of clothing company Aritzia (TSX:ATZ) recovered from their lows and are up about 23% year to date. While the stock has delivered above-average returns so far in 2024, it has further room for growth. Aritzia is focusing on opening new boutiques and introducing fresh styles, which will drive its top and bottom lines. Further, its focus on enhancing customer experiences and expanding omnichannel offerings augurs well for future growth.
Aritzia’s revenue and earnings growth rate is expected to accelerate from current levels. Its management expects the top line to increase at a compound annual growth rate (CAGR) of 15-17% through 2027. Further, leverage from higher sales and the company’s initiatives to reduce inventory management costs and drive productivity will likely support its earnings and increase its share price.
goeasy
goeasy (TSX:GSY) is one of the top stocks for creating wealth. The financial services company consistently grows its revenue and earnings per share (EPS) at a double-digit rate, which drives its share price higher. For instance, goeasy stock has grown at a CAGR of over 34% in the past five years, delivering a return of about 340%. Moreover, it enhanced its shareholders’ returns through higher dividend payments.
goeasy’s growing consumer loan portfolio, a large addressable market, diversified funding sources, and geographical expansion will likely drive its revenue at a double-digit rate. Higher sales, steady credit performance, and improving operating efficiency will likely cushion its earnings and drive its share price and dividend payouts.
Alimentation Couche-Tard
Investors could consider adding shares of Alimentation Couche-Tard (TSX:ATD). This convenience store operator consistently delivers solid sales and earnings growth, which drives its stock higher. ATD’s revenue and earnings have risen at a CAGR of 7.3% and 18.8% over the past decade. Moreover, it increased its dividend at a CAGR of 26.6% during the same period.
Thanks to its impressive financials, Couche-Tard stock has risen about 427% in 10 years, reflecting a CAGR of over 18%. Its resilient business models, extensive store presence, and value pricing strategy augur well for growth. Further, its focus on expanding private label offerings, optimizing its distribution network, and entering new categories will support its growth and share price.
Shopify
Shopify (TSX:SHOP) stock has corrected significantly from its pandemic-driven highs. This decline in value presents an excellent opportunity for investing, especially when the e-commerce giant is transitioning towards an asset-light business model and delivering sustainable earnings.
Shopify is well-positioned to capitalize on the digital shift. Moreover, the infusion of artificial intelligence (AI) technology into its offerings, innovative product launches, and the addition of new features are likely to drive its merchant base and transaction volume. Further, Shopify is also expected to benefit from improving take rates and increasing subscription fees in the long term.
Celestica
Celestica (TSX:CLS) stock has increased over 270% over the past year. Despite this notable increase in value, Celestica stock could rise further and benefit from AI-driven demand, which will likely boost its financials. It’s worth noting that the growing adoption and deployment of AI and new customer wins will boost its Connectivity & Cloud Solutions (CCS) business.
Adding to the positives, the strong demand across its commercial aerospace submarkets will likely drive its Aerospace and Defense business. While its Advanced Technology Solutions segment faces short-term headwinds, the ongoing shift towards electric vehicles and smart energy provides a solid foundation for long-term growth. In summary, Celestica’s diversified portfolio and exposure to high-growth end markets position it well to deliver above-average returns.
