As the stock market continues to surge to new heights in 2024, investors are facing a common challenge: pinpointing fundamentally strong stocks that haven’t already experienced significant price increases. With many stocks reaching record highs, it’s crucial to zero in on companies with robust fundamentals and promising growth prospects, regardless of their recent stock price trends.
In this article, I’ll spotlight two Canadian stocks that are catching my attention this year. Notably, one of these stocks has experienced substantial gains recently, while the other has been largely overlooked, presenting a valuable buying opportunity for long-term investors.
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Aritzia Stock: A Rising Star in the Apparel Sector
Strong Recovery Amid Challenging Times
The first top Canadian stock on my radar is Aritzia (TSX
). This Vancouver-based apparel designer and retailer has recently come into focus due to its impressive stock performance. Despite facing a tough economic landscape, Aritzia has managed to deliver consistent revenue growth, making its stock a compelling buy.
After enduring a 47% decline in value over the past couple of years, ATZ stock has made a significant comeback in 2024. Currently trading at $45.29 per share, with a market cap of $5.1 billion, Aritzia has seen nearly 65% gains year-to-date.
Financial Performance and Growth Potential
In its fiscal year 2024, which ended in February 2023, Aritzia reported a 6.2% year-over-year (YoY) increase in total revenue, reaching $2.3 billion. However, inflationary pressures and weak consumer spending led to a 50.5% YoY decline in adjusted annual earnings to $0.92 per share.
Despite these challenges, Aritzia’s recent quarterly performance shows positive signs. For the quarter ending in May 2024, the company’s revenue grew by 7.8% YoY to $498.6 million, driven by a 13% increase in U.S. sales. Additionally, its adjusted quarterly earnings surged by 120% YoY to $0.22 per share.
Aritzia’s aggressive real estate expansion and enhanced brand visibility, particularly in the United States, bolster its long-term growth prospects, making it an attractive addition to any growth-oriented portfolio.
BlackBerry Stock: An Undervalued Tech Gem
Recent Struggles and Market Performance
In contrast to Aritzia, BlackBerry (TSX
) has not enjoyed similar success recently. This Waterloo-based cybersecurity and IoT (Internet of Things) company has seen its share prices drop by 34% in 2024, currently trading at $3.10 per share with a market cap of $1.8 billion. This underperformance stands in stark contrast to the broader market, with the TSX Composite up 9.7% year-to-date.
Resilience in IoT and Future Outlook
Despite the recent downturn, BlackBerry’s IoT segment remains strong. For the quarter ending in May, IoT sales increased by 18% YoY to $53 million, driven by robust demand for its QNX software.
As BlackBerry advances its technological solutions for the automotive industry, the growth outlook for its IoT segment appears promising. Additionally, I anticipate a rebound in demand for BlackBerry’s cybersecurity solutions as global economic conditions improve, potentially leading to a significant rally in its stock price.
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With the stock market reaching new heights in 2024, finding fundamentally sound stocks that haven’t yet surged is crucial. Aritzia’s strong recovery and consistent growth prospects make it an appealing choice for growth investors. Meanwhile, BlackBerry’s current undervaluation and promising IoT segment present a potential opportunity for long-term gains. By focusing on these stocks, investors can position themselves to benefit from future market movements and company-specific growth.