A Pair of Iconic Retail Stocks Deserve a 2nd Look

Two iconic retail stocks deserve a second look for their favourable business outlooks and visible growth potentials.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors haven’t focused much on retail stocks in 2022, but two Canadian icons can’t be overlooked. First up is lifestyle brand Canada Goose (TSX:GOOS)(NYSE:GOOS), which had record sales in fiscal 2022. Second, the 20% EPS growth of value retailer Dollarama (TSX:DOL) in the 12 months ended January 30, 2022, was an incredible feat.

Record sales

Canada Goose incurred a net loss of $9.1 million in Q4 fiscal 2022. However, net income for the year (12 months ended April 3, 2022) rose 34.5% to $94.6 million versus fiscal year 2021. Total revenue increased 21.5% year over year to $1.09 billion.

Its chairman and CEO Dani Reiss said, “We closed fiscal 2022 with record sales for the year and confidence in our ability to accelerate earnings growth in Fiscal 2023 and beyond. We are expanding to new markets with new partnerships and stores complemented by a laser focus on customer experience.”

According to Reiss, global supply chain issues had minimal impact, because 84% of Goose’s products are manufactured in Canada. The rest are fabricated in Europe. Currently, higher and escalating freight costs are thorns to the business. Management also reported a 3% improvement in gross margin to 69.1%, and it should remain in the high 60s for fiscal 2023.

The $2.73 billion parka maker attributes the margin growth to price increases and a higher proportion of sales to wholesale partners compared to international distributors. Meanwhile, China, a key market, had significantly lower store traffic due to COVID-related lockdowns. Nevertheless, a gradual buildup is taking place.

Reiss further added that North America was the biggest growth driver, because of strong consumer confidence. Likewise, pre-pandemic trends are back. In its outlook For Q1 and full fiscal 2023, management expects revenue to be $60-$65 million and $1.3-$1.4 billion, respectively.

Canada Goose remains wary of COVID-19 restrictions, because it will weigh on ongoing demand improvement. As of this writing, you can purchase this retail stock at a deep discount. At $25.99 per share, the year-to-date loss is 44.56%. However, market analysts covering GOOS has a 12-month average price target of $42 (+61%).

Resilient business model

According to Dollarama’s president and CEO Neil Rossy, the $19.99 billion value retailer delivered strong operational and financial results in fiscal 2022, notwithstanding the pandemic’s impact. The top and bottom lines increased 7.5% and 17.5%, respectively, versus fiscal 2021.

Rossy added, “This remarkable performance speaks to the resilience of our business model and the relevance of our value promise to Canadian consumers, a promise we are committed to fulfilling in what remains a complex and volatile environment as we enter Fiscal 2023.” Performance-wise, Dollarama investors have enjoyed an 8.05% year-to-date gain, besting the broader market (-4.83%).

Based on market analysts’ forecast, the current share price of $68.30 could climb 12.4% to $76.77 in 12 months. The overall return should be slightly higher if you factor in the modest 0.30% dividend. Management increased the yield recently by 10%. Dollarama anticipates a favourable sales environment in the first half of fiscal 2023. Also, it plans to open 60-70 stores during the year.    

Profitable retailers

Canada Goose and Dollarama are worth including in your portfolio. Both companies have never been in the red in the last three years.

Should you invest $1,000 in Lightspeed right now?

Before you buy stock in Lightspeed, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Lightspeed wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canada day banner background design of flag
Dividend Stocks

The Top Canadian Stocks to Buy Right Now With $5,000

These three Canadian stocks are top choices, especially for those wanting growth with a $5,000 investment.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 Top Dividend Stocks for TFSA Passive Income

These stocks have increased their dividends annually for decades.

Read more »

top TSX stocks to buy
Dividend Stocks

Dip Buyers Could Win Big: The Top Canadian Stocks to Buy Now

These Canadian stocks are top options for investors looking for strength, income, and more in the future.

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

2 Cheap TSX Stocks to Watch in 2025

These top TSX stocks might be oversold.

Read more »

sale discount best price
Dividend Stocks

2 High-Yield TSX Stocks Now on Sale

These stocks have good track records of dividend growth and now offer high yields.

Read more »

woman analyze data
Dividend Stocks

A 9% Dividend Stock Paying Cash Every Single Month

This dividend stock remains an essential staple for investors, which is what makes it a top passive-income choice.

Read more »

Canadian Dollars bills
Dividend Stocks

This Dividend Stock Paying 6.4% Monthly Income Looks Undervalued

A Canadian REIT trading at a 15% discount to NAV just raised its payout—and its resilience shines in Q1 2025…

Read more »

dividends can compound over time
Dividend Stocks

I’d Invest $7,000 in These 2 High-Yield Dividend Stocks for Monthly Income

By investing $7,000 evenly across these two high yield dividend stocks, you could earn about $49.50 in tax-free income each…

Read more »