Delays in the Bank of Canada’s decision to cut interest rates and their potential impact on the economy kept stock investors worried in the second quarter of 2024, leading to a 1.3% quarterly decline in the TSX Composite benchmark. Nonetheless, the Canadian central bank’s decision to slash interest rates in the last two meetings and growing expectations that the U.S. Federal Reserve will also slash interest rates in the coming months have driven a strong bullish movement in the TSX index of late as it currently trades with 5.7% quarter-to-date advances.
Long-term investors can capitalize on this upward momentum by buying shares of growth companies that look cheap and have the potential to benefit from lower interest rates, as cheaper borrowing costs could lead to increased capital investments and higher consumer spending. Here are two top Canadian stocks you can consider for a $10,000 investment in a bullish market.
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Descartes Systems stock
The first Canadian growth stock you can consider buying in this bullish market is Descartes Systems Group (TSX: DSG). After rallying by nearly 21% so far in 2024, the shares of this Waterloo-headquartered software company currently trade at $134.16 per share with a market cap of $11.5 billion. If you don’t know it already, Descartes Systems primarily focuses on logistics and supply chain management solutions. It provides software and services that streamline logistics operations for businesses globally, making it a critical player in an industry essential to global trade.
Although Descartes hasn’t announced its July quarter results yet, its total revenue in the 12 months ended in April 2024 rose 16.2% YoY (year over year) to US$587.6 million, with the help of consistent strength in its services segment revenue. Effective cost management also drove its adjusted earnings up by 11.1% YoY in these four quarters to US$1.40 per share. In the latest quarter, the company’s cash from operating activities jumped by 30% from a year ago to US$ 63.7 million.
Its recent acquisitions of OCR Services and Aerospace Software Developments strengthen Descartes’s market position in global trade compliance and regulatory solutions, which could strengthen its financial growth trends in the years to come.
Aritzia stock
Another fundamentally strong stock with the potential to benefit from the current bullish market conditions could be Aritzia (TSX: ATZ). This Vancouver-headquartered apparel designer and retailer currently has a market cap of $5.2 billion as its stock trades at $45.76 per share with solid 66% year-to-date gains.
In the May 2024 quarter, Aritzia’s revenue grew positively by 7.8% YoY to $498.6 million. The robust performance of its U.S. business segment also helped the company post strong adjusted quarterly earnings of $0.22 per share, beating Street analysts’ expectations of $0.16 per share.
In recent quarters, Aritzia has increased its investments in digital marketing and infrastructure, which support its aggressive expansion in the U.S. market and focus on increasing brand awareness. Considering these positive factors, I wouldn’t be surprised if ATZ stock continues to outperform the broader market by a wide margin in the long run.
