The TSX Composite Index delivered an 18% gain in 2024, as cooling inflation and easing interest rate pressures helped restore investor confidence. Most growth stocks saw strong recoveries, but not every sector participated in the rally. Many retail stocks, for example, struggled amid weaker consumer spending.
However, things might change in 2025 as further interest rate declines are likely to spur economic activity, boost corporate earnings, and improve consumer sentiment. Some sectors that lagged in 2024 could stage a strong rebound, while others may continue to build on their momentum. In this article, I’ll highlight two of the most promising Canadian stocks for 2025 — companies that may have been overlooked of late but have strong potential for long-term gains.
Couche-Tard stock
Alimentation Couche-Tard (TSX:ATD) is the first promising Canadian stock you may want to consider in early 2025. After declining by around 5% over the last year, Couche-Tard stock currently trades at $75.93 per share with a market cap of $72.1 billion. While it’s not a high-yield dividend stock, it still provides a steady annualized dividend yield of around 1%.
This Laval-headquartered company mainly focuses on operating a large network of over 16,800 convenience and mobility stores in 31 countries and territories. The company generates revenue from in-store merchandise sales and fuel distribution, making it a major player in both retail and energy.
Couche-Tard has faced some headwinds due to macroeconomic challenges. In its latest quarter ended in October 2024, acquisitions and higher wholesale fuel sales pushed the company’s total revenue up by 6% YoY (year-over-year) to US$17.4 billion. However, weaker U.S. fuel margins and softer consumer traffic led to an 11% YoY decline in its adjusted quarterly profit to US$705 million.
Nevertheless, Couche Tard’s recent acquisition of 290 U.S. fuel and convenience sites is expected to strengthen its market presence. In my opinion, besides expected improvements in the economic environment, along with its focus on operational efficiency, digitalization, and fuel promotions, could help Couche Tard stock rebound in 2025.
Pet Valu stock
Just like Couche-Tard, shares of Pet Valu (TSX:PET) have also seen a challenging year but have the potential to post a strong recovery in 2025. PET stock currently trades at $26.13 per share with a market cap of $1.9 billion after around 18% value erosion over the last year. While the specialty pet retailer offers a dividend yield of 1.7%, its long-term growth potential makes it an even more attractive pick for investors looking beyond short-term market volatility.
Despite a softer retail environment, Pet Valu managed to grow its sales by 5.2% YoY in its latest quarter ended in September 2024 to $276 million. During the quarter, the company also expanded its store network by adding six new locations to bring its total to 805 stores across Canada. However, same-store sales declined by 2.5% from a year ago due to weaker transaction volumes.
That said, Pet Valu’s consistent focus on premium pet products and strategic growth moves, such as strengthening its supply chain with a new Metro Vancouver distribution centre, could expand its profitability. These positive fundamental factors, coupled with expected improvements in consumer spending, could help Pet Valu stock rebound in 2025.
