Easing macroeconomic pressures helped fuel a rally in Canadian stocks in 2024, and the trend looks set to continue into 2025. With inflation cooling, the Bank of Canada and the U.S. Federal Reserve are expected to lower interest rates further, creating a supportive environment for equities. Declining rates will reduce borrowing costs, stimulate economic activity, provide a tailwind for businesses, and help companies benefit from a favourable consumer spending environment. That’s why it could be the right time for long-term investors to focus on finding high-quality stocks with robust fundamentals.
If you’re looking for such opportunities, here are two magnificent Canadian stocks that could continue to surge in 2025, making them smart choices for long-term investors.
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Metro stock
After declining by 8.5% in 2023, Metro (TSX: MRU) jumped by over 30% in 2024 to currently trade at $91.10 per share with a market cap of $20.1 billion. This well-known Montréal-based retailer and distributor generates revenue by operating a network of supermarkets, pharmacies, and distribution centres across Canada.
Even amid a challenging consumer spending environment, Metro’s financial performance remained robust in 2024. In its fiscal year 2024 (ended in September), the Canadian retailer’s total sales rose 2.4% YoY (year over year) to $21.2 billion with the help of a strong 5.7% increase in its pharmacy same-store sales. In addition, its online food sales surged by 27.6% YoY, highlighting Metro’s adaptability to changing consumer preferences and its strong foothold in the growing e-commerce space.
Metro recently completed the final phase of its $1 billion supply chain modernization program, which is expected to improve its efficiency and scalability potential. Similarly, its efforts to strengthen customer loyalty have paid off well with the launch of the MOI Rewards program in Ontario, which attracted over one million members within weeks of its rollout.
As we move into 2025, Metro’s strong financials, focus on innovative ways to boost operations, and a favourable consumer spending environment could continue to accelerate its growth and drive its share prices higher.
Gildan Activewear stock
Gildan Activewear (TSX: GIL) climbed by over 50% in 2024. With a market cap of $10.4 billion, the shares of this Canadian apparel manufacturer are currently priced at $67.19 apiece.
A key driver of the recent strength in Gildan’s financials has been the strong performance of its activewear category. In the latest quarter ended in September 2024, this segment saw a 6% YoY rise in sales due mainly to strong demand in North America and the launch of innovative products like its soft cotton technology.
Also, Gildan’s international sales surged by 20% YoY in the latest quarter. Interestingly, its global expansion strategy and improved supply chain efficiency have helped the company meet rising demand while reducing production costs. These factors, coupled with its strong financial discipline, are also helping the company improve profitability. These are the key reasons Gildan reported an impressive adjusted operating margin of 22.4% in the latest quarter.
Besides its strong fundamentals, an improvement in macroeconomic conditions could provide Gildan with additional momentum heading into 2025.
