Investing for the long haul is all about finding the right mix of high-quality Canadian stocks. For most investors, that means balancing reliable dividend stocks with higher-potential growth stocks.
Owning a mix of both is essential to keep your portfolio diversified and reduce short-term risk from market volatility. It also gives you exposure to a wider range of opportunities, increasing your chances of discovering hidden gems.
Ideally, over time, your entire portfolio grows in value, allowing you to compound your income and accelerate your returns.
However, even if most of your stocks perform well, it’s often just one or two hidden gems that end up driving the majority of your portfolio’s gains.
So, if you’re looking for growth stocks with the potential to consistently expand at above-average rates for years to come, here’s one of the best to consider today.
One of the best Canadian growth stocks to buy and hold for years
When most investors think of Canadian growth stocks, they often picture companies in tech or small-cap energy stocks. However, over the last five years, one of the most impressive Canadian growth stocks has actually been in the retail sector, Aritzia (TSX:ATZ).
Aritzia is a vertically integrated fashion company that has seen its popularity explode over the last decade and has now become one of the most well-known apparel brands in the country.
However, despite its growing popularity with consumers and strong long-term record of growth, many investors still underestimate just how powerful its business model is and how much growth potential it continues to have.
That’s what makes Aritzia a hidden gem. Although it’s been one of the most impressive growth stocks over the last few years, it’s still underappreciated. Furthermore, it could have even more potential in the coming years as it rapidly expands across the United States.
How fast is Aritzia growing?
Although Aritzia stock has gained more than 280% over the last five years, a compound annual growth rate (CAGR) of more than 31%, its the growth in its operations that’s even more impressive and shows the stock still has plenty of growth potential going forward.
For example, over its last five full fiscal years, Aritzia’s sales have increased at a CAGR of 22.8%, while its normalized earnings per share (EPS) have increased at a CAGR of 18%.
Furthermore, over the next two years, as Aritzia continues to open the majority of its new boutiques south of the border and scale its costs, analysts estimate that Aritzia’s revenue will grow at a CAGR of 17.7%, while its normalized EPS are expected to see a huge jump, with estimates calling for a CAGR of 33% over the next two years.
And that’s just the beginning. Since Aritzia started out expanding across Canada, it still has more boutiques north of the border, despite a population roughly nine times the size in the U.S., giving it a massive runway for growth.
As of the end of August, Aritzia had 68 boutiques in Canada and 66 in the United States. Plus, in addition to its retail locations, much of Aritzia’s growth comes from online shopping, where the company now ships to customers in over 180 countries around the world.
So, if you’re looking for a top Canadian growth stock to buy now and hold for years, Aritzia’s long-term potential makes it one of the top picks on the TSX.
