After a spring and summer of strong gains, the TSX seems to be teetering. Concerns about rising bond rates, rising commodity prices, and trade wars have put the market into a bit of a funk. Many stocks have seen substantial pullbacks. Here are two stocks to buy with $5,000 in September.
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Descartes Systems Group: A top TSX stock to buy now
The first TSX stock is Descartes Systems Group (TSX: DSG). DSG stock has been drawn down unfairly by worries about artificial intelligence (AI) disrupting its business. The stock is down 21% over the past year.
What the market is yet to realize is that AI should be a net positive. Descartes is integrating it across its software and network platform. Descartes collects massive amounts of data through its logistics network. It is finding ways to monetize that through specialized agent applications for its customers.
Descartes operates the leading logistics network around the world. Once adopted by a business, it is very hard to leave. It creates a huge competitive advantage.
This TSX stock just delivered a very strong quarter. Revenue increased 12% to $200 million. It generated $81 million of operating cash flow. Earnings per share increased 33% to $0.57.
Margins continue to march higher and the company keeps generating very strong cash flows. Descartes just added $250 million of new acquisitions to its portfolio. It still has $150 million of net cash and ample debt capacity for further acquisition growth.
At 26 times earnings, this TSX stock is trading near the bottom of its all-time valuation range. Certainly, it isn’t the cheapest software stock out there. However, you get very high-quality value for what you are buying today.
Aritzia: An attractive buy on the pullback
Another TSX stock that looks like a great buy this September is Aritzia (TSX: ATZ). While its stock is up 38% over a year, it feels like it has been on a free fall lately. It is down 26% in the past three months.
Many in the market are concerned that it will hit more difficult comps in coming quarters after it saw a surge in spending due to its app introduction. That may be true, but I wouldn’t downplay its longer-term growth story.
Aritzia’s boutique count in the U.S. has now eclipsed its Canadian count. The company is seeing 12–18-month paybacks on new boutiques. Yet, Aritzia could still more than double its store count in America. It hasn’t even started to talk about plans to expand into Europe and Asia. It still has years of growth ahead, especially if it can continue to execute smartly like it has.
Last quarter, net revenue grew 43% to $950 million. Adjusted net income per share increased 98.3% to $0.99. It is aiming to grow by 23–29% in fiscal 2027.
This TSX stock can be very volatile. In the past three years, it has had six drawdowns of 18% or worse. Yet, the stock is still up 426% in that period. Currently, it is facing another tough drawdown, which makes for an excellent opportunity to add this quality TSX stock today.
