While stocks remain volatile in the near term, this asset class has consistently delivered inflation-beating returns over time. In fact, investors should view the ongoing pullback in valuations as an opportunity to buy and hold quality stocks at a lower multiple.
In this article, I have identified two top TSX stocks you can buy right now. Let’s see why.
Is this top TSX stock a good buy right now?
Founded in 1995, Constellation Software (TSX:CSU) has built its success on acquiring, managing, and growing vertical market software businesses across public and private sectors in North America and Europe. It focuses on specialized and mission-critical software solutions for industry-specific applications.
The TSX stock went public in May 2006 and has since returned 35,000% to shareholders after adjusting for dividend reinvestments. It means a $500 investment in CSU stock soon after it went public would be worth more than $175,000 today, which is exceptional.
The company’s growth story is far from over, given that it reported fourth-quarter (Q4) revenue of $2.7 billion, 16% higher than the same period in 2023. Its net income attributable to common shareholders more than doubled to $285 million ($13.44 per diluted share), up 102% from $141 million ($6.65 per diluted share) in Q4 2023.
Constellation’s revenue reached $10.1 billion for the full year, a 20% increase from $8.4 billion in 2023. Its organic growth stood at 2% for the year, demonstrating an ability to expand existing businesses alongside its aggressive acquisition strategy.
Cash flow metrics were particularly strong. Operating cash flow increased 33% to $678 million in Q4, while free cash flow rose by 48% to $482 million. For the full year, these figures rose 23% and 27%, respectively.
Constellation’s acquisition engine remained robust, completing numerous transactions totalling $1.79 billion for 2024, including holdbacks and contingent payments. In Q4 alone, the company deployed $475 million in cash consideration across multiple acquisitions.
Priced at 50.5 times forward earnings, CSU stock trades at a premium. However, analysts remain bullish and expect the tech stock to gain around 11% over the next 12 months.
Is ATZ stock undervalued?
Aritzia (TSX:ATZ), the Vancouver-based women’s fashion retailer, delivered impressive fiscal Q3 results that showcased accelerating momentum across its business. Normalized net revenue increased 16% to $729 million, with comparable sales growing 9.2% for the quarter ended December 3, 2024.
The company’s U.S. expansion strategy continues to fuel growth, with net revenue in the region surging 27% on a normalized basis to $404 million. This performance was driven by strong e-commerce growth, outstanding results from new and repositioned boutiques, and mid-single-digit comparable sales growth in existing stores.
“The strong response to our Fall and Winter assortment was driven by both new styles and client favourites,” said Chief Executive Officer Jennifer Wong, highlighting the broad-based success across Aritzia’s brands, including Wilfred, Babaton, TNA, and Golden.
Aritzia’s aggressive retail expansion included opening 11 new and three repositioned boutiques in the last 12 months, including flagship locations in SoHo, Fifth Avenue, and Chicago. The company increased its U.S. square footage by 25% in Q3 alone.
Profitability showed significant improvement, with gross profit margin expanding 430 basis points to 45.8%, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) jumped 49% to $136 million, representing 18.7% of revenue.
Looking ahead, Aritzia raised its fiscal 2025 outlook, projecting net revenue of $2.67-$2.69 billion (15% growth) and adjusted EBITDA margin improvement of 400-450 basis points. Management remains confident in achieving its fiscal 2027 targets through geographic expansion, e-commerce acceleration, and growing brand awareness in the United States.
Analysts expect ATZ to expand adjusted earnings from $0.92 per share in fiscal 2024 to $2.68 per share in fiscal 2026. So, priced at 19.7 times forward earnings, the TSX stock is reasonably valued and trades at a discount of almost 50% to consensus price targets.
