It’s always fun to check up on last year’s biggest market winners. But the list of outperformers should not act as any sort of screener for your stock selection process. Indeed, you’re probably sick of hearing that previous performance is not a guarantee of future results. Undoubtedly, if it were as simple as buying prior winners, everyone would be handsomely beating the stock market. Sometimes, last year’s winner could be a colossal market underperformer in the new year, given the high valuation and set of expectations placed upon a firm.
Indeed, as an investor, you want to seek out wonderful firms that have less in the way of expectations. And though such firms can be tougher to come by after booming market rallies, I do think there’s something out there for DIY investors willing to put in the effort. In this piece, we’ll look at two red-hot performers that may still have gas in the tank. Of course, this doesn’t mean the road ahead won’t be treacherous, especially if Trump tariffs do happen after what’s sure to be a brief February pause.
Though I think there’s more gain to be had, investors had better be ready for a choppier environment. For DIY investors, such volatile spikes are a good thing. When you have hyper-volatile intraday moves, Mr. Market may be inclined to overreact and open up opportunities for investors willing to play the long game.
Without further ado, let’s consider two stocks that have had a scorching-hot start to 2025 and could continue to gain over the next year and beyond.
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Gildan Activewear
Gildan Activewear (TSX: GIL) is a well-run producer of various essential clothing items. The stock had an incredible past year, soaring nearly 66%. The strength of 2024 has carried into the first month of 2025, with GIL stock rising around 11% in January.
Undoubtedly, there’s a lot of momentum riding behind the “boring” consumer discretionary firm. But the stock is anything but expensive, with shares going for just 20.6 times trailing price to earnings (P/E). For investors looking for a broadening out of market strength to some of the less-loved value plays, I find GIL stock to be a tempting pick-up. Additionally, Gildan has a relatively wide economic moat in its printwear business, which could continue to do more of the heavy lifting for a firm that could begin to really undercut rivals in the clothing scene.
Sure, tees and underwear and all the sort are commoditized. But with Gildan’s exceptional cost management, competing against the firm is becoming tough. As a promising share-taker in its corner of activewear, I’d not sleep on the name now that it’s firing on all cylinders. Collect the juicy 1.6%-yield dividend while you wait for the firm to make up for lost time after doing mostly nothing for the many years leading up to 2024’s big breakout.
Aritzia
Aritzia (TSX: ATZ) is back in fashion in a big way after scoring more than 80% gains in the past year. Despite the parabolic rally, I think the women’s clothing retailer is anything but expensive, especially when you consider the growth runway south of the border.
Indeed, tariffs represent a serious risk as the firm aims to expand south of the border. With the stock sinking over 7% in the face of such tariffs, though, I think investors are getting an opportunity to snag the fashionable retailer at a reasonable, single-digit percentage discount.
While tariffs would be a huge blow to Aritzia, I think the long-term narrative remains as sound as ever. The company has great brand appeal, with a world of expansion opportunities to ponder. The latest quarter (Q3) was nothing short of remarkable as the e-commerce business helped propel an incredible earnings beat. Though trading around Trump tariffs could prove tricky, I think Aritzia ought to be a core growth holding for young investors.
