We’re excited to announce that we not only have a new stock for the Bull List this week, but we also have our content through the summer lined up. It’s going to be an incredibly busy summer here at Stocktrades Premium.
Along with this, as you know we enjoy consistently delivering value here at Stocktrades Premium. We’ve got a big feature update, one that was heavily requested, coming to the platform this summer. More on that later in the email. For now, let’s dive into the Bull List stock.
We’ve added Aritzia (TSE:ATZ) to the Bull List
If you remember a few months back, we added Aritzia to the watchlist because we liked what we were seeing. However, the market was in a bit of a tailspin and we knew there was likely a bit of downward pressure to come because of some minor events in its quarterly earnings.
That’s not to say there couldn’t be more downward pressure on a company like Aritzia. But at this point, we feel comfortable adding it to the Bull List for the long term. This is a profitable, rapidly growing clothing company that has already captured the eyes of many Canadians and is now expanding quickly in the United States.
The company’s rapid growth in regards to both boutiques and e-commerce showcases its ability to grow with an omnichannel approach and appeal to a wider base of customers. The company’s target market is primarily women, but it is beginning to expand into men’s fashion which is in our opinion an untapped vertical for growth.
The backbone of a successful retail company is its brand. A few other Canadian companies that have executed with a large degree of success would be Lululemon and Canada Goose. We feel Aritzia’s exposure to growth in North America versus Canada Goose’s exposure to growth primarily being situated in China gives Aritzia a massive advantage. The fact the company has executed so well amid a global pandemic gives us a high degree of confidence that the company can do so moving forward, even if the economy were to enter a recession.
We have analyzed a multitude of situations with Aritzia when it comes to both growth and margins on a discounted cash flow basis. Right now, Aritzia is guiding to 20% growth next year and only a 1% dip in margins. If it were to maintain this growth over the next 4 years, we come to a fair value of $57.
Even if we were to lower the company’s potential growth to 10% annually, we still come to a fair value of around $40 per share, indicating a 14%+ margin of safety. If we narrow it down even further to 5% potential growth, there is a margin of safety, but it now becomes razor-thin with room for error on margins.
Aritzia has zero debt and also has historically not diluted its shares, making DCF analysis more reliable than others in this rising rate environment.
This is a jam-packed report on Aritzia, one you’ll want to have a read of. And of note, I (Dan) plan to buy the company after I wait the 7 days after our highlight.
You can view our full report of Aritzia here
Dividend Bull List
In this environment, it’s becoming challenging to identify strong income options that will withstand the potential future environment outside of our Foundational Stocks.
Why? Because despite growth plays like Aritzia which have taken a hit in price, most income stocks, especially ones that are defensive, are performing quite well. So, this leads to most of them being fully valued right now.
That being said, we are narrowing our research down and do have a few shortlisted stocks for potential addition to the Dividend Bull List. Stay tuned for those.
Summer newsletter schedule
We’ve lined up an amazing sequence of content for Premium members throughout the summer. And we figured instead of just releasing it as we go, we’d send out a schedule.
- Sunday, July 3rd – Canadian Foundational Stock Mid-Year Overview
- Sunday, July 10th – US Foundational Stock Mid-Year Overview
- Sunday, July 24th – Early-Stage Portfolio Reviews/Earnings
- Sunday, July 31st – Mid-Stage Portfolio Reviews/Earnings
- Sunday, August 7th – Late-Stage Portfolio Reviews/Earnings
New feature addition coming to Stocktrades Premium
We are excited to announce that we’ve been working on some developments behind the scenes and will be adding US stocks to our growth, dividend safety, and key data screeners!
We’re also making some advancements inside of the screeners themselves to make them much more user-friendly, especially on excel.
We are still likely a few weeks out on this, but we figure we’d let members know that they will soon be able to screen some of the top companies in the United States to find the best dividend payers and the fastest growth prospects.
