3 Top Canadian Retail Stocks to Buy in November

Posted on November 14, 2021 by Dylan Callaghan

Canadian retail stocks often get ignored by many investors, as our economy is relatively small. Even if a large retail outlet were to scale their business in Canada, with only 10% of the population of the United States, it's hard to truly move the needle.

However, what many overlook is the fact that many of the top Canadian stocks in retail have operations in much larger demographics like China and the United States.

In this piece I'm going to shine a bit of a light on some of the best Canadian retail stocks in the country so that you can take advantage of some strong opportunities, as they certainly do exist!

Keep in mind, these stocks are in no particular order.

What are the top retail stocks in Canada right now?

Canada Goose (TSX:GOOS)

For a while, Canada Goose (TSE:GOOS) was one of the fastest growing companies in the country. Strong brand growth and a rock solid product made it a must own for many Canadians, and particularly those in Asia.

The company's primary driver for growth in recent times has been its Asia segment. So as you can expect, when COVID-19 started surfacing in China in November of 2019, the company was materially impacted. In fact, you'd be hard pressed to find a company outside of the oil and gas industry that was impacted as badly as Canada Goose.

Canada Goose

Canada Goose price change November 2019 to March 2020

Canada Goose (TSE:GOOS)

As you can see, early pandemic was harsh for the company's share price as retail operations were beginning to be sent into a tailspin.

For a company that was typically growing at a 25-30% pace on an annual basis, it saw revenue shrink by nearly double digits in Fiscal 2021 and the closure of retail shops in both China and Canada caused sales to plummet. There's also the added factor that animal cruelty activists were all over Canada Goose for its apparent abuse of animals in the production of its products.

Strong signs of a turnaround in Canada Goose

Speaking of these concerns from the some of the public, the company has stated it will no longer use fur in its products, which will open up more potential sales. Additionally, the company is finally seeing a resurgence in direct-to-consumer sales due to a recovery from the pandemic and it is growing its e-commerce segment at a rapid pace.

In late 2021, the company raised its Fiscal 2022 guidance in which it expects to generate upwards of $1.175B in revenue. This would mark a 25.9% increase from TTM figures at the time of writing, and is more inline with the growth figures we were used to seeing out of Canada Goose pre-pandemic. This would also be a $450M increase, or more than 50%, from 2019 levels which was its last fiscal year in which it wasn't impacted by the pandemic.

If you're looking to potentially invest in a resurging growth company, one that's recent underperformance is due to no fault of their own, Canada Goose might be a strong option.

On a side note, check out two deeply discounted Canadian stocks to look at today.

Dollarama (TSX:DOL)

Although not as flashy growth wise as Canada Goose, Dollarama (TSE:DOL) instead provides a retail option that is defensive in nature for those buying Canadian stocks. Dollarama is likely to flourish during economic situations where Canada Goose may suffer.

Why? Consider that most of Canada Goose's products cost in excess of $1000, while Dollarama's are under $4. When times get tight one might pass on luxury items and pinch pennies on basic necessities, which is exactly what Dollarama allows Canadians to.

Dollarama

Dollarama - a store number giant among its peers

The sheer size of Dollarama here in Canada is one of the reasons it is a strong option for those looking for Canadian retail exposure. The company is larger than its 4 top competitors, combined.

In fact, Dollar Tree is the largest competition when it comes to the discount retailer, and Dollarama is six times its size.

At one point, Dollarama was growing at a pretty rapid clip. Now, it isn't the growth stock that it used to be, but the company can still be expected to put up double-digit growth rates in terms of both earnings and revenue, and its valuations are somewhat appropriate for that level of growth, trading in the low 20's when it comes to forward price to earnings.

To Dollarama's benefit the pandemic has shifted a lot of consumer habits when it comes to shopping. Consumers are buying more at once and coming in less, which bodes well for most all retailers. More money per purchase and less foot traffic is ultimately better for the stores.

Not to mention, the company is also growing its e-commerce section at a pretty decent rate. Many laughed at the company's aspirations to drive growth via e-commerce, especially considering buyers must order in bulk. But it has been a strong area for them after all.

Out of the 3 Canadian companies on this list, Dollarama is probably the least flashy. But it's important to remember that not all stocks in your portfolio need to be flashy. When times are tight, consumers will still head to this discount retailer to buy basic goods.

Aritzia (TSX:ATZ)

As we go from a high-priced retailer in Canada Goose to a discount retailer in Dollarama, we'll finish off on what we view as a middle of the line Canadian retail company in Aritzia (TSE:ATZ).

Don't be confused with this company's mid-tier price point on its products however. It's product base and quality are simply outstanding, and hard to match among many operators in the same price range. This is exactly why the company has had such success over the last few years.

Aritzia

Aritzia price change October 2016 to November 2021

Aritzia stock

Aritzia is a relatively young company on the TSX, making its debut in late 2016. The company designs apparel and accessories for its collection of brands and sells them under the Aritzia banner. Think of things like blouses, sweaters, pants, jackets, jumpsuits, t-shirts, and more.

The company still generates a large amount of its revenue from Canada. However rapid US expansion is quickly changing this, and the company is becoming exposed to a much larger target market.

Aritzia bouncing back from pandemic?

The company is showing strong double-digit growth on both the top and bottom line, posting positive net income for 4 straight years now. In 2019, the company had managed to post over 75% growth in net income when compared to 3 years prior. If the pandemic hadn't of hit, it is likely they would be continuing to grow at a double-digit pace.

The company is getting back on track and is expected to post mid double-digit earnings and revenue growth again as pandemic related headwinds subside. By 2024, analysts expect this Canadian retailer to generate revenue just shy of $1.7B and post earnings of $1.89 per share. Considering the company recently bumped its total outlook, there is the possibility it could hit these numbers before 2024.

Overall, the company has grown an extremely strong brand and appeals to those who aren't looking to spend a fortune, but don't want to purchase cheaper forms of clothing either. From an investment standpoint, it's turned out to be lucrative.

An interesting note? We highlighted Aritzia to Stocktrades Premium members in early 2019 at $16.26 a share. At the time of writing, it's currently $51. You can learn more about Stocktrades Premium here.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in the post below.

Dylan Callaghan

About the author

Dylan is the co-founder of Stocktrades.ca and an avid self-directed investor. He holds a portfolio of Canadian growth and dividend growth stocks, and believes that anyone, regardless of financial status, stands to benefit from investing in the stock market. His ultimate goal with his writing and the continual development of Stocktrades.ca is to create a resource that helps Canadians, and investors from around the world, make more money and retire earlier.