The Canadian stock market momentum from the start of 2026 has started to fade a bit. Rising bond rates, trade wars, and geopolitical tensions have seemed to snuff out the market’s spark.
The S&P/TSX Composite Index has a track record of historically receding for a period between September and November. The good news is that the market often posts a strong recovery in the following months.
If you are a long-term investor, you can use these typical pullbacks to buy positions that you were envying earlier in the year. With valuations trading at more attractive levels, you can be opportunistic and boost your returns by buying on the dips. Here are two quality stocks that would be worth adding on recent market dips.
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Aritzia: Use the volatility to your advantage
Aritzia (TSX: ATZ) stock is up 436% in the past three years. However, it has experienced a near -30% drawdown in the past three months. Certainly, this stock can be volatile. It has seen nine drawdowns of -20% or worse. Yet, it still managed to deliver outstanding returns for patient shareholders.
I think this might be the case again. It never feels good buying a stock during a steep dip. However, that is really when the best returns can be made.
Aritzia has been delivering very strong growth. Last quarter, comparable sales grew 35%! The company is generating very strong cash flows, and it has net cash on the balance sheet. While the market is worried about lapping near-term comps, investors must remember that this company still has a large market to grow into.
Aritzia could easily double its U.S. store count before it even moves into European or Asian markets. It continues to target 23–28% revenue growth in fiscal 2027. That is still an impressive target.
Yes, this is not the first inning for this stock. However, you can still get great returns in the third or fourth inning, especially when its stock trades at a reasonably attractive valuation right now.
MDA Space: A top stock for exposure to space
MDA Space (TSX: MDA) has been another solid performer in recent years. Its stock is up 267% in the past three years. However, like Aritzia, MDA has pulled back 28% in the past three months.
This stock has also been volatile. It has experienced four drawdowns of -25% or worse in the past three years.
Yet, this company has a lot going for it if you can stomach the volatility. MDA is a crucial contractor in the space industry. It develops satellites, space components/robotics, and earth observation. The company became even larger after it announced strategic partnerships and acquisitions in France and the U.S.
MDA issued equity to complete those deals, so that is likely one reason the stock is off. However, those acquisitions drastically expand MDA’s expertise, product mix, and geographic exposure. They are very strategic moves that should pay off for shareholders longer term.
In the past three years, MDA has seen revenue and earnings per share rise by 35% and 22.5%, respectively, at a compounded annual growth rate (CAGR). With a $4 billion backlog, it looks well-positioned for a strong growth trajectory.
If you want exposure to an exciting trend like space, MDA is one of the best stocks to look at. It trades at a large discount to any of its peers, and the pullback makes it look even more attractive.
