The TSX Composite Index soared 18% in 2024, rewarding Canadian investors with impressive gains. But as 2025 kicks off, volatility has made an unwelcome return. With investors weighing the impact of cooling inflation, falling interest rates, and lingering global risks, uncertainty is shaking up the markets.
Adding to the turbulence, Prime Minister Justin Trudeau’s surprise announcement that he plans to resign has sparked questions about Canada’s political future and its potential economic implications. For disciplined long-term investors, however, moments like these could be an opportunity to snap up high-quality TSX stocks at discounted prices.
In this article, I’ll share two top TSX stocks that are on my strategic watchlist in 2025 and explain why I’m ready to add them to my portfolio during the next dip.
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TransAlta stock
The first TSX stock I’m keeping an eye on is TransAlta (TSX: TA). This Calgary-based power generation firm, which specializes in renewable energy and traditional power generation, has been gradually transitioning toward a cleaner energy portfolio. After rallying by 82% over the last year, its stock currently trades at $19.54 per share with a market cap of $5.8 billion.
While TransAlta stock’s recent performance has been impressive, its robust financial growth trends and proactive growth initiatives make it even more appealing for long-term investors. The company’s ability to adapt to market conditions is evident in its approach to Alberta’s energy market, which saw significant volatility in 2024. For example, its proactive hedging strategy and asset optimization efforts helped it deliver a free cash flow of $0.47 per share in the third quarter despite declining Alberta spot power prices and milder weather.
Moreover, TransAlta’s focus on renewable energy and strategic acquisitions, such as its recent acquisition of Heartland Generation, highlights its proactive efforts to accelerate future growth. Given its strong fundamentals, I don’t want to miss the chance to buy TransAlta stock. While I may not buy it right now due to its recent rally, I’m definitely watching it closely for a more attractive entry point.
Aritzia stock
I already own Aritzia (TSX: ATZ) stock, and I have to admit — it’s been one of the most exciting growth stocks in my portfolio. Over the last 12 months, ATZ stock has jumped by 127% to currently trade at $56.91 per share with a market cap of $6.4 billion. Given this robust performance and its impressive financials, I’m seriously considering adding more Aritzia stock to my portfolio on a dip.
While the stock already outperformed the broader market by a huge margin in 2024, the company’s recent strong fundamentals suggest there could be even more room to run. While Aritzia is yet to announce its November 2024 quarter results (expected on January 9, 2025), in the previous quarter ended in August, the company’s total revenue jumped 15.3% year over year, even as most other retailers continue to struggle with a slowdown in consumer spending. Strong demand for its products in the U.S. market helped it post $0.21 per share in adjusted quarterly earnings, beating analysts’ expectations of $0.15 per share.
With its strong U.S. growth, expanding e-commerce presence, and solid profitability improvements, Aritzia’s long-term potential makes it a really attractive buy on the dip for investors seeking solid long-term returns.
