Market dips look like wonderful buying opportunities in old charts. While they’re happening, they tend to look more like the financial system has lost a wheel, is losing traction, and is refusing to pull over.
That discomfort explains why investors often miss them. They wait for the economic outlook to improve, volatility to disappear, and a polite invitation from the market. Unfortunately, share prices usually recover before the news becomes reassuring.
The better approach is deciding what to buy before the next stock market correction arrives. I’d want companies with improving businesses, credible growth routes, and enough financial strength to survive whatever frightened everyone. Aritzia (TSX: ATZ) and Magna International (TSX: MG) would be near the top of that list.
Source: Getty Images
ATZ
Aritzia designs and sells women’s apparel through its boutiques, website, and mobile app. Canada built the brand, but the United States has become the growth engine that could make the company considerably larger.
Fiscal first-quarter revenue increased 43.4% year over year to $951 million, while comparable sales jumped 35.1%. Those results weren’t powered by one unusually fashionable jacket. Every geography and channel generated double-digit growth.
U.S. revenue increased 54.5% to $638 million and represented 67% of total sales. Digital revenue climbed 55.5%, showing that Aritzia stock can enter new markets without waiting for a boutique to appear beside the nearest luxury candle store.
Profitability improved even faster. Adjusted earnings per share (EPS) rose 95.9% to $0.96, while the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 410 basis points to 20.1%. Management subsequently raised its fiscal 2027 revenue outlook to between $4.55 billion and $4.75 billion.
Near $137, however, Aritzia stock still trades around 36 times trailing earnings. That valuation assumes its U.S. expansion keeps working, making the shares vulnerable to tariffs, fashion mistakes, weaker consumer spending, or a general retreat from Canadian growth stocks.
That’s precisely why I’d keep it on the dip list. A market-driven decline could reduce the valuation without reducing the company’s store runway, digital momentum, or growing American customer base.
MG
Magna supplies vehicle manufacturers with body structures, powertrain systems, electronics, seating, mirrors, and complete vehicle assembly. That makes it deeply exposed to global automobile production, which isn’t normally where investors hide when recession fears arrive.
Yet Magna’s latest results suggest the business is becoming more efficient before industry conditions fully improve. Second-quarter sales increased 3% to US$11 billion even as global light-vehicle production declined 2%.
Adjusted operating earnings increased 16% to US$677 million, lifting the adjusted operating margin to 6.2% from 5.5%. Adjusted EPS rose 29% to a second-quarter record of US$1.86, while free cash flow more than doubled to US$617 million.
Management responded by raising its 2026 adjusted earnings guidance to between US$6.70 and US$7.30 per share. Expected free cash flow also increased to between US$1.75 billion and US$1.85 billion. Magna stock trades near 10 times the midpoint of that earnings outlook on its U.S. listing, leaving considerably less optimism embedded in the valuation than Aritzia stock carries.
Magna stock also returned US$598 million through dividends and share repurchases during the quarter. Its US$0.50 quarterly dividend offers investors income while operational improvements, restructuring, and buybacks work on per-share returns.
Bottom line
Neither company is an automatic purchase on every red day. Aritzia stock could stumble if demand cools or U.S. stores mature faster than expected. Magna stock remains exposed to tariffs, lower vehicle production, customer pricing pressure, and an uneven electric-vehicle transition.
I’d therefore treat a broad market decline differently from a company-specific collapse. If the prices fell while sales, margins, guidance, and balance sheets remained healthy, I’d begin with a partial position and preserve cash for another decline.
The next dip might last several months, several days, or approximately the time required to decide everything is probably fine again. Having Aritzia stock and Magna stock ready beforehand would make that uncomfortable window considerably easier to use.
