The equity markets often provide long-term shareholders an opportunity to buy quality stocks at a discount and benefit from stellar returns over time. It’s crucial to identify companies positioned to grow their revenue and earnings sustainably, which should translate to share price appreciation.
Here are three of the best Canadian stocks TSX investors can buy now.
Aritzia stock
Down 42% from all-time highs, Aritzia (TSX:ATZ) is valued at $3.4 billion by market cap. Founded in 1984, Aritzia is a design house and one of the largest luxury brands in Canada.
The drawdown in Aritzia’s stock price can be attributed to a deceleration of its top-line growth. For instance, the company grew its net sales by just 6% in fiscal 2024 (ended in February), down from 47% in fiscal 2023 and 74% in fiscal 2022. Moreover, an elevated cost environment weighed heavily on its profit margins as EBITDA (earnings before interest, tax, depreciation, and amortization) fell 8.6% to $72.5 million, while adjusted net income declined by 18% to $38.2 million.
Aritzia opened six new boutiques and repositioned three existing boutiques in premier real estate locations. The Canadian retail company executed a smart spending initiative, which should translate to annualized runrate savings of over $60 million from process optimization, vendor negotiations, and KPI (key performance indicator) improvements.
It might seem the worst is over for Aritzia as analysts expect the company to increase revenue by 10.3% to $2.6 billion in fiscal 2025, while adjusted earnings are forecast to expand by 93.5% to $1.78 per share. So, priced at 19.4 times forward earnings, ATZ stock is quite cheap and trades at a discount of over 25% to consensus price target estimates.
Jamieson Wellness stock
Valued at $1.19 billion by market cap, Jamieson Wellness (TSX:JWEL) stock trades 38% below all-time highs, increasing its dividend yield to 2.8%. Jamieson Wellness is among Canada’s largest vitamins, minerals, and supplements companies and is now gaining traction south of the border.
In the first quarter (Q1) of 2024, Jamieson Wellness reported revenue of $128 million, down 6.4% year over year. While Jamieson Brands grew by 6.7%, its Strategic Partners business sales fell by 55.7% as the company prioritized branded shipments amid labour disruptions.
JWEL stock is cheap. It is priced at 16.9 times forward earnings and is trading at a discount of 24.5% to consensus price target estimates.
Alimentation Couche-Tard stock
The final TSX stock on my list is Alimentation Couche-Tard (TSX:ATD), which has already created game-changing wealth for shareholders. Valued at $73 billion by market cap, ATD stock has returned 4,300% in the last 20 years after adjusting for dividends.
Alimentation Couche-Tard is one of the largest retail companies in the world that operates in the convenience and mobility space with operations in 29 countries and close to 17,000 stores.
In January 2024, it closed the acquisition of certain European retail assets from TotalEnergies, expanding its store count by 2,175 locations. ATD has a strong track record of successful integrations and synergy realizations, which should help it improve earnings growth going forward.
Analysts expect ATD to expand adjusted earnings to $4.34 per share in fiscal 2025 (ended in April), up from $3.9 per share in fiscal 2024. Priced at 17.4 times forward earnings, ATD stock trades at a discount of 12% to consensus price target estimates.
