Hot Stocks for a Hot Month: Best TSX Stocks to Buy in June 2024

As summer approaches and interest rates decline, you might want to consider adding these two hot TSX stocks to your portfolio in June 2024.

| More on:
Woman has an idea

Image source: Getty Images

The Bank of Canada slashed the policy interest rate by 25 basis points in the first week of June 2024, marking its first monetary policy easing since March 2020. The market widely expected this major move, as the central bank had signalled its intention to ease monetary conditions in response to gradually easing inflationary pressures.

Overall, lower interest rates are likely to stimulate economic activity by making borrowing cheaper for consumers and businesses alike. This strategic rate cut could set the stage for a hot month on the TSX as long-term investors look to benefit from the expectations of favourable economic conditions. With interest rate and inflation-sensitive sectors like banking and retail expected to gain, it could be the right time to invest in some fundamentally strong TSX stocks from these sectors. Here are two of the best stocks that could offer attractive returns if you buy them in June 2024.

Bank of Montréal stock

Since the Bank of Canada started a series of interest rate hikes in early 2022, most bank stocks have underperformed the TSX Composite benchmark. One of the stocks that has suffered from this trend is Bank of Montréal (TSX:BMO). It’s currently the third-largest Canadian bank by market capitalization (nearly $83.8 billion), as its stock trades at $114.89 per share with roughly 12% year-to-date losses. At this market price, BMO stock offers a 5.3% annualized dividend yield and distributes these dividend payouts every quarter.

In the first half (ended in April) of its fiscal year 2024, the Bank of Montréal’s total revenue slid by 6.5% from a year ago to $15.8 billion due mainly to a decline in its net interest income. In addition, higher provision for credit losses drove its adjusted earnings down by 16.3% YoY (year over year) for these six months to $5.15 per share.

Nevertheless, as the recent cut in interest rates boosts the demand for loans, BMO could see its revenue and earnings growth improving in the second half of fiscal 2024. This is one of the key reasons why I expect BMO stock to recover sharply in the near term, making it a hot TSX stock to buy in June.

Aritzia stock

Aritzia (TSX:ATZ) could be another top TSX stock that could benefit from a lower interest rate environment and easing inflationary pressures. After witnessing 47% value erosion in the previous couple of years, ATZ stock has recovered by 31% so far in 2024 to currently trade at $36.06 per share with a market cap of $4 billion.

In its fiscal year 2024 (ended in February), this Vancouver-headquartered apparel designer and retailer’s YoY revenue growth rate fell to 6.2% from 46.9% in the previous fiscal year. Similarly, inflationary pressures and a challenging consumer spending environment led to a 50.5% YoY drop in its adjusted annual earnings in fiscal 2024 to $0.92 per share.

As consumer spending could regain strength with the help of lower interest rates in the coming quarters, I expect Aritzia’s sales and earnings growth trends to improve in fiscal 2025, which should drive this top TSX stock even higher. Besides that, the Canadian retailer’s consistent focus on expanding its presence in the strategically important United States market boosts its long-term growth prospects.

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

Dollar symbol and Canadian flag on keyboard
Tech Stocks

2 Canadian Stocks to Watch While They’re Still Dirt Cheap

These two Canadian stocks offer ample opportunities as the world shifts into not just AI but cybersecurity needs.

Read more »

Cogs turning against each other
Dividend Stocks

How Interest Rate Cuts Affect REITs

Now is a good time to investigate Canadian REITs and take a position in the form of stocks or exchange…

Read more »

Stocks for Beginners

The Best Stocks to Invest $2,000 in Right Now

Looking for the best stocks to buy now and hold for decades? Here's a trio that can provide growth and…

Read more »

dividends grow over time
Stocks for Beginners

3 Under-$10 TSX Stocks to Buy in July

These three stocks are cheaper than cheap, and could produce incredible returns as they continue to climb in the next…

Read more »

A steel grain silo storage tank with solar panel in a yellow canola field in bloom in Alberta, Canada.
Dividend Stocks

The Ultimate TSX Stock to Buy With $1,000 Right Now

Once at triple-digit prices, Nutrien stock (TSX:NTR) now offers a steal of a deal for long-term growth as well as…

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Stocks for Beginners

Better Stock to Buy Now: Canada Goose or Aritzia Stock?

In the battle for Canada's top retailer, it looks like these companies are looking beyond our borders for even more…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

3 Things You Need to Know if You Buy NorthWest REIT Today

This REIT holds a super high dividend yield at 7.2%, but before you invest here is exactly what investors need…

Read more »

Stocks for Beginners

All-Time Highs, Next-Level Gains: 2 Top TSX Growth Stocks to Watch

These two top stocks continue to climb, but there are more than enough reasons why investors should continue to keep…

Read more »