The broader basket of Canadian stocks were in rally mode as the TSX Index continued its ascent this Monday, rising by just shy of 0.4%. Undoubtedly, rate and recession fears seem to have taken a backseat. And though it’s unclear as to when rates will decline and consumer spending will pick up again, I do think the growth stocks that took one to the chin back in 2022 are still worth nibbling into while they’re still miles below their all-time highs.
Indeed, new highs are looking quite unrealistic for certain high-growth tech stocks that shed well over half of their value as a part of the 2022 tech-centric sell-off. Either way, I still think young investors should favour the growth plays while time is still on their side.
Growth is still in a bit of a rut. But young investors should still consider investing as markets recover
Undoubtedly, it could take many years for a growth darling like Shopify (TSX:SHOP) to see new heights again. However, if you’re in it for the next 5–10 years, I’d argue that it’s worthwhile to punch your ticket. Shopify’s full recovery won’t happen overnight, but you don’t need it to if you’re a long-term investor.
Without further ado, let’s look at two top battered stocks that I think look like magnificent bargains relative to their long-term growth profiles. The growth trade may continue to be the pain trade. That said, for the investors willing to ride out the tough terrain, I do think the potential rewards make the rougher ride worthwhile.
Shopify
Shopify stock added another 1.7% on Monday, bringing shares up to $95 and change. Indeed, Shopify stock’s recovery may be difficult to stop as we head into the new year and the firm continues to pull the curtain on intriguing new innovations.
The e-commerce platform provider has been under considerable pressure in recent years, thanks in part to the toxic combo of higher rates and a pained consumer.
Over the next three years, it’s not hard to imagine a scenario that sees lower rates and a recovered consumer market. Indeed, it’s hard to even think about normalized conditions here. But if they do arrive sooner rather than later, Shopify’s growth could re-accelerate by enough to keep its scorching rally going strong.
Canada Goose Holdings
Canada Goose Holdings (TSX:GOOS) is a legendary luxury parka maker that’s in a horrific multi-year slump. Shares peaked back in late-2018 and are now down well north of 83%. Despite the crash, shares don’t look all that cheap, with shares currently going for 29.8 times trailing price-to-earnings (P/E). As the economy sours, demand for $1,000-plus outerwear just isn’t there.
Though it’s unclear when demand will reverse course, I do think that the Goose could fly incredibly high in a hurry once the economy shows signs of turning. In the meantime, expect the discretionary retail play to continue gravitating lower.
Canada Goose is still a wonderful brand with international appeal. Though I’m not too enthused about the company’s expansion into other product categories, I am confident the firm will bounce back once the economy is in a better spot.
