As inflation continues to cool off and interest rates decrease both north and south of the border, there’s a lot of opportunity for a recovery rally in the coming months. Therefore, it’s essential to take advantage of the market environment and buy high-quality Canadian growth stocks now before they get even more expensive.
Growth stocks are some of the most important businesses that long-term investors will buy and hold because they can power your portfolio to years of gains.
Furthermore, when you buy these stocks as cheaply as possible, you set yourself up for even more capital gains potential as they rally back to fair value in the near term and then continue to grow their operations for years to come.
So, with that in mind, here are three of the best growth stocks Canadian investors can buy today.
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One of the best Canadian growth stocks to buy now
Over the last year, Aritzia (TSX:ATZ), the impressive women’s fashion retailer, has already begun to recover. However, while it remains off its all-time highs, it’s certainly one of the best Canadian growth stocks to buy now.
The number one reason to buy Aritzia is for its impressive growth potential. For years, it’s expanded its operations rapidly, increasing both its revenue and profitability. For example, in just the last five years, its sales have increased by a whopping 167%.
However, even after this unbelievable growth, Aritzia still has a ton of potential going forward. For example, right now, the Canadian growth stock still has more boutiques in Canada than it does south of the border despite a much larger population in the U.S.
Therefore, as Aritzia recovers from the temporary headwinds it faced due to higher inflation and as it continues to open more boutiques across North America, it’s easily one of the best Canadian growth stocks to buy now.
In fact, analysts are currently estimating that Aritzia’s normalized earnings per share will jump to more than $1.80 this year and increase another 32% next year to $2.42.
Therefore, while Aritzia trades at just 19.2 times its forward earnings, it’s a must-own stock. For comparison, its three-year average forward price-to-earnings ratio is upwards of 25.2 times.
Two defensive growth businesses to buy and hold for years
In addition to Aritzia, two more of the best must-own Canadian growth stocks are Alimentation Couche-Tard (TSX:ATD) and Brookfield Infrastructure Partners (TSX:BIP.UN).
A high-quality growth stock like Aritzia with significant potential is important for your portfolio. However, it’s also important to buy defensive growth stocks that you can be confident in owning for the long haul.
These are businesses with essential operations that offer defensive qualities in times of economic turmoil but also offer attractive long-term growth potential when the economy is rebounding.
In Couche-Tard’s case, it owns thousands of gas stations and convenience stores all over the world. These are businesses that are typically highly recession-resistant, and although they may see some impact on sales from a slowing economy, in general, Couche-Tard’s operations should remain robust.
Plus, over the long haul, it’s one of the best Canadian growth stocks because it’s consistently making value-accretive acquisitions and scaling its costs to increase profitability and drive shareholder value. In fact, over the last decade, Couche-Tard has earned investors a total return of 371%.
Meanwhile, Brookfield owns essential infrastructure assets that are highly recession-resistant. Furthermore, like Couche-Tard, its operations are also diversified globally, which helps mitigate risk for investors.
In addition to its reliable operations, though, Brookfield is also constantly looking to recycle its capital and sell off its more mature businesses, then use the funds to buy up new, undervalued opportunities.
This leads to consistent growth for Brookfield, both in its share price and its distribution. In fact, Brookfield aims to increase its distribution by 5% to 9% annually, and today, the stock offers a yield north of 4.8%.
Therefore, when you consider its capital gains potential, the passive income it generates and the fact that it’s one of the most reliable growth stocks on the TSX, there’s no question that Brookfield Infrastructure is a must-own investment for Canadians.
