In the second quarter of 2024, delays in the Bank of Canada’s decision to cut interest rates sparked concerns among stock investors, contributing to a 1.3% decline in the TSX Composite benchmark. However, the situation has since evolved. The Bank of Canada has made notable cuts to interest rates in its last two meetings, and growing speculation that the U.S. Federal Reserve may follow suit has created a bullish trend in the TSX index. As a result, the TSX index has surged by 5.7% quarter-to-date.
For long-term investors looking to capitalize on this upward momentum, now is a promising time to consider growth companies poised to benefit from lower interest rates. Reduced borrowing costs can stimulate capital investments and boost consumer spending. Here are two top Canadian stocks worth considering for a $10,000 investment in this bullish market:
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Descartes Systems Group (TSX: DSG)
Overview and Market Performance
Descartes Systems Group, headquartered in Waterloo, Ontario, has emerged as a standout performer in 2024, with its stock appreciating nearly 21% year-to-date. Currently trading at $134.16 per share, Descartes boasts a market capitalization of $11.5 billion. This software company specializes in logistics and supply chain management solutions, offering critical software and services that enhance global trade operations.
Financial Highlights
In the 12 months ending April 2024, Descartes reported a 16.2% year-over-year increase in total revenue, reaching US$587.6 million. The company’s revenue growth was supported by robust performance in its services segment. Effective cost management led to an 11.1% increase in adjusted earnings per share, which rose to US$1.40. Additionally, cash from operating activities surged by 30% year-over-year, reaching US$63.7 million.
Descartes’s recent acquisitions of OCR Services and Aerospace Software Developments further bolster its market position in global trade compliance and regulatory solutions. These strategic moves are likely to enhance the company’s financial growth prospects in the future.
Aritzia (TSX: ATZ)
Overview and Market Performance
Aritzia, a Vancouver-based apparel designer and retailer, has also demonstrated impressive growth in 2024. With its stock trading at $45.76 per share and a market capitalization of $5.2 billion, Aritzia has achieved a substantial 66% gain year-to-date. The company’s strong performance reflects its ability to capitalize on favorable market conditions.
Financial Highlights
In the May 2024 quarter, Aritzia’s revenue increased by 7.8% year-over-year, reaching $498.6 million. The company’s U.S. business segment played a significant role in this growth, contributing to strong adjusted quarterly earnings of $0.22 per share. This result surpassed analyst expectations of $0.16 per share.
Aritzia has been investing heavily in digital marketing and infrastructure, supporting its aggressive expansion into the U.S. market and enhancing brand visibility. Given these positive developments, Aritzia’s stock is well-positioned to continue outperforming the broader market.
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As the Bank of Canada and the U.S. Federal Reserve navigate interest rate decisions, investors have witnessed a shift in market dynamics. The recent bullish movement in the TSX index presents opportunities for those looking to invest in growth stocks. Descartes Systems Group and Aritzia stand out as compelling options, offering potential for significant returns in the current economic climate. By focusing on these fundamentally strong companies, investors can strategically position themselves to benefit from lower interest rates and an improving market outlook.