Canadian retail stocks have seen solid gains in 2024 as the broader market rally, easing inflation, and lower borrowing costs continue to boost investors’ confidence. These favourable conditions are setting the stage for what could be a lucrative holiday season for retailers and apparel manufacturers, as consumer spending could pick up momentum in the final month of the year.
Historically, consumer-focused stocks on the TSX tend to perform well during the holiday rush, and this year looks no different, creating an opportunity for investors to benefit from this seasonal surge in demand. In this article, I’ll highlight two of the best growth-oriented stocks in Canada that you can buy ahead of this holiday season and hold for years to come.
Aritzia stock
Aritzia (TSX:ATZ) is a Vancouver-based design house and fashion retailer that mainly focuses on trendy, high-quality clothing and accessories. The company generates revenue by designing, producing, and selling its exclusive collections through a mix of boutique stores and e-commerce platforms.
So far in 2024, ATZ stock has outperformed the broader market by a huge margin as it has advanced by 65% year to date compared to the TSX Composite’s 21.2% gains. With this, it trades at $44.92 per share with a market cap of $5.1 billion.
In the last few years, Aritzia has increased its focus on expanding its presence in the highly profitable U.S. market, which has played an important role in accelerating its financial growth trends. In the second quarter (ended in August) of its fiscal year 2024, the Canadian fashion retailer posted a 15% YoY (year-over-year) surge in its total sales to $615.7 million with the help of a notable 24% jump in U.S. market revenue. In addition, its quarterly gross profit margin also expanded to 40.2% last quarter from 35% a year ago.
As the demand for Aritzia’s products is expected to rise during the holiday season ahead, the company could continue to post strong financial results, which could drive its share prices even higher.
Gildan Activewear stock
Another attractive top stock to buy ahead of this holiday season is Gildan Activewear (TSX:GIL). Headquartered in Montréal, this apparel manufacturer mainly focuses on basic clothing, including t-shirts, sweatshirts, socks, and underwear. After rallying by 59% year to date, GIL stock is currently at $69.64 per share with a market cap of $10.8 billion.
While it’s not a retailer like Aritzia, Gildan Activewear benefits significantly from the holiday season due to the high demand for its essential apparel items, especially in the wholesale and e-commerce market platforms.
Gildan recently delivered record third-quarter revenue of US$891.1 million, up 2.4% YoY. This growth in its top line was mainly driven by a 6% YoY increase in Activewear sales with the help of robust demand in North America and international markets. Similarly, its adjusted quarterly earnings also jumped 14.9% from a year ago to US$0.85 per share, beating analyst estimates.
Besides its strong financials and expectations of high demand for its products during the holiday season, Gildan’s focus on innovative product launches, like its soft cotton technology, make it a really attractive stock to buy now and hold for the long term.
