The TSX Composite Index is wrapping up its fourth straight month of gains, climbing 2.4% so far in October and yielding a strong 12.3% positive return since June. Easing inflation, lower interest rates, and an optimistic economic outlook have fueled this record-breaking rally in the Canadian stock market. For long-term investors, this recently started rally could be a golden opportunity to invest in growth stocks that have a good mix of strong fundamentals and robust business models.
In this article, I’ll highlight two of the best Canadian growth stocks you can consider adding to your portfolio now and holding them for years to come.
Aritzia stock
Whether you’re investing to make your portfolio more stable or to supercharge your portfolio’s growth, Aritzia (TSX:ATZ) could be a great growth stock to consider on the Toronto Stock Exchange right now. This vertically integrated design house and apparel retailer has a market cap of $4.8 billion as its stock trades at $42.89 per share with a solid 56% year-to-date gain.
In the last few years, especially in the post-pandemic era, Aritzia has increased its focus on expanding its presence in the U.S. market by opening new stores in prime locations and improving its online platform. In the second quarter (ended in August 2024) of its fiscal year 2025, the company’s U.S. market sales jumped by 23.9% YoY (year over year), leading to a 15.3% increase in its total revenue to $615.7 million. In addition, lower markdowns and cost savings improved its gross profit margin by 520 basis points from a year ago.
Besides the strong demand for its products in the U.S. market, Aritzia’s focus on new boutique openings and accelerating e-commerce initiatives is likely to improve its financial growth trends further in the coming years, making its stock an attractive buy right now.
Canadian Tire stock
Canadian Tire (TSX:CTC.A) could be another attractive Canadian growth stock for long-term investors today. The Toronto-based firm runs a diversified business across retail, financial services, and real estate segments, making it one of the most recognizable brands in Canada. It has a market cap of $9 billion as its stock trades at $158.11 per share with 12.4% year-to-date gains.
Factors such as a weak consumer spending environment and unfavourable weather across Canada led to a 3.8% YoY decline in Canadian Tire’s total revenue to $7.7 billion. Nevertheless, strong retail gross margins, favourable freight rates, and supply chain savings still drove the company’s adjusted earnings up by a solid 21% YoY to $4.94 per share in the first half.
Overall, Canadian Tire’s continued focus on improving its customer experience through technology integration and store renovations could help it maintain strong earnings growth in the coming years. However, it’s important to note that Canadian Tire stock has underperformed the broader market so far in 2024, as the TSX Composite has already risen over 17% this year. Despite its strong earnings growth in recent quarters, this underperformance makes this top growth stock even more attractive to buy now and hold for the long term.
