2 Unassailable Earnings Growth Stocks for a Wobbly Economy

Aritzia and another top growth stock that could be hot performers through 2023 and beyond.

| More on:
Coworkers standing near a wall

Image source: Getty Images

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 moresdf

Many new investors have been preparing for the 2023 recession, with a rush to so-called “value” names at the expense of growth plays. Indeed, higher rates have knocked hyper-growth right off the podium. With the wobbly economy sending stock markets in both directions, many investors may be inclined to wait it out. Markets don’t tend to bottom out even before recessions arrive, after all.

Further, the 25% in peak-to-trough downside on the S&P 500 is quite mild compared to most historical recession-hit bear markets. Undoubtedly, many expect a mild downturn up ahead for Canada’s economy. But there’s also a chance, albeit potentially slim, that Canada can land on its feet after a few months of negative GDP growth.

Finally, there are a few out there that see no recession in sight. If that’s the case, the bearish moves made by markets last year could prove completely unwarranted and set the stage for a nice bounce through 2023.

With that in mind, we’ll have a glance at two top-notch growth stocks that I think will be tough to derail, even if a recession hits this year. Their growth stories are strong enough to outlast recession headwinds, especially mild recession headwinds!

Aritzia

Aritzia (TSX:ATZ) is more than just a women’s clothing retailer. It’s one of the quickest-emerging fashion brands in Canada. With the firm setting its sights on the U.S. market for growth, I couldn’t be more bullish. Indeed, a recession could curb demand for upscale clothing through 2023. That’s no surprise for a discretionary retailer. However, longer term, I don’t think there’s any stopping Artizia as it looks to make a splash in the states.

Aritzia’s early move into the U.S. market has been quite encouraging. In the latest quarter, Aritzia clocked in strong sales numbers despite headwinds ranging from inflation to other macro headwinds weighing on disposable income. Net revenue surged 38% year over year to $624.6 million. That’s a record in the midst of a wobbly market environment!

Topping off the quarter, CEO Jennifer Wong said she doesn’t see “any notable changes in behaviour” of customers. Without a doubt, there are macro headwinds; it may be that Aritzia isn’t feeling them because its brand is that powerful. Even at 30.2 times trailing price-to-earnings (P/E), I remain a fan of the name and think its growth can lead it higher in a rough year for the economy.

Created with Highcharts 11.4.3Aritzia PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD) is a convenience retailer that’s also behind a market-crushing stock. Over the past year, the name is up around 25%. On a hot Thursday for stocks, though, ATD pulled back by 2.2%. Evidently, consumer staples cooled off as investors rotated back into risk. I think the dip is unwarranted. Couche-Tard isn’t just a staple; it’s a defensive growth stock whose earnings will power shares higher.

At 16.2 times trailing P/E, I don’t believe the magnitude of growth and acquisition power is factored in. Further, there’s always a chance that a recession could be moderate rather than mild. In that case, ATD stock ought to be viewed as a staple for your portfolio.

In any case, it’s business as usual for Couche, as it looks to grow its store count globally.

Created with Highcharts 11.4.3Alimentation Couche-Tard PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

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 Joey Frenette has positions in Alimentation Couche-Tard. The Motley Fool has positions in and recommends Alimentation Couche-Tard and Aritzia. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

A red umbrella stands higher than a crowd of black umbrellas.
Stocks for Beginners

Top Recession-Resilient TSX Stocks to Buy With $3,000

It's time to increase your exposure to defensives!

Read more »

An airplane on a runway
Stocks for Beginners

Will Bombardier’s Stock Price Keep Soaring in 2023?

Here are the top reasons why recent gains in Bombardier’s share prices could just be the start of a spectacular…

Read more »

Automated vehicles
Stocks for Beginners

Magna Stock: How High Could It Go in 2023?

Magna International could grow in 2023 as the electric vehicle market recovers. Could MG stock hit new highs?

Read more »

Man data analyze
Stocks for Beginners

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

The next decade could be absolutely insane for these three top stocks that offer growth in both the near and…

Read more »

Profit dial turned up to maximum
Stocks for Beginners

How TFSA and RRSP Investors Can Turn $20,000 Into $320,000 in 30 Years

Investing in the stock market and holding patiently over the long term is the key to success.

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Tuesday, February 21

A minor recovery in oil and base metals prices could lift commodity-linked TSX stocks at the open today.

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

New to Stocks? 5 Easy Tricks to Give You a Leg Up

New stock investors from all walks of life can improve their returns from applying some, if not all, of these…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Stocks for Beginners

2 Top TSX Stocks for TFSA Investors to Buy Now

If you have a long investment horizon, don't waste your TFSA on high-interest savings plans. Generate long-term wealth with these…

Read more »