When investors are looking for some of the best stocks to buy right now in Canada, there are many industries to consider. However, one industry that may not necessarily be at the top of the list but has many of the best stocks to buy for the long haul is the retail sector.
In general, retail stocks are thought of as consumer discretionary businesses that can see a significant uptick in sales when the economy is strong but will see a negative impact on sales when the economy is worsening.
And while that may be true for many stocks in the sector, there are a handful of high-quality stocks that can grow rapidly and consistently. In fact, even some of the highest-quality defensive growth stocks in Canada are in the retail sector.
So, if you’re looking to increase your exposure to retail stocks, here are three no-brainer investments to buy right now.
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Two of the best defensive growth stocks in Canada
If you’re looking for exposure to the retail sector but prefer a more defensive investment, both Dollarama (TSX:DOL) and Alimentation Couche-Tard (TSX:ATD) are some of the best stocks in Canada to consider.
Both Dollarama and Couche-Tard have a bunch of similarities as well as a bunch of differences.
First off, both stocks have generated impressive and, more importantly, consistent returns over the last decade. For example, Dollarama has earned investors a total return of 630% over the last 10 years. That’s a compound annual growth rate (CAGR) of 22%. Meanwhile, Couche-Tard has generated a total return of 240% over that stretch, a CAGR of more than 13%.
Another similarity between the two is the fact that many of the products each company sells are staples, which is what helps to make them both so defensive.
In Dollarama’s case, consumers turn to its discount retail operations to buy household staples as cheaply as possible. Meanwhile, many of the products at Couche-Tard’s convenience stores, in addition to fuel at its gas stations, are also staples that see little to no impact on sales when the economy weakens.
The one main difference is that Dollarama tends to grow more through organic methods, such as increasing its store count and improving its merchandising, whereas much of Couche-Tard’s growth over the years has come from value-accretive acquisitions.
Dollarama is also the more defensive stock, often seeing larger increases in its sales when the economy is worsening rather than improving. However, it’s also the more expensive stock of the two, trading at a significant growth premium.
Whichever you prefer, these aren’t just two of the top retail stocks in Canada; they are two of the best stocks you can buy, period. Therefore, while they trade off their highs, they’re undoubtedly some of the best to invest in today.
One of the best retail stocks to buy now and hold for years
In addition to Dollarama and Couche-Tard, a more traditional retail stock selling consumer discretionary goods is Aritzia (TSX:ATZ).
Although Aritzia is much less defensive than Couche-Tard or Dollarama, it’s still one of the best retail stocks to buy right now.
For years, Aritzia has been one of the most impressive growth stocks in Canada. Its products consistently resonate with consumers, and it continues to open up new boutiques in Canada and the United States.
Furthermore, Aritzia also invested heavily in building its e-commerce platform years ago, which has been a massive benefit for the business over the years, especially through the pandemic.
Plus, today, while Aritzia still generates significant sales from its online shopping, its e-commerce platform also helps to identify which regions have the most growth potential and where it should look to open up its next boutiques.
So, with the stock now recovering from the headwinds it faced as inflation was surging, it’s easily one of the best retail stocks to buy now.
Not only do analysts expect Aritzia’s sales will grow by more than 10% this year, but they’re also estimating a more than 16% jump in sales next year.
Therefore, while you can still buy Aritzia stock below its all-time high, it’s certainly one of the best retail stocks to consider adding to your portfolio right now.
