ATZ:CC - Better Buy in February 2024: Magna Stock vs. Aritzia Stock
2024-02-26 16:10:00 ET
We’re starting to look back at February, and seeing where some companies thrived and others fell after earnings. Two of the companies that investors now may want to consider after earnings then are Magna International ( TSX:MG ) and Aritzia ( TSX:ATZ ). Both companies had strong performance and a history of growth stock status in the past. But are these two headed towards more of that in the future?
Here’s which one I would consider on the TSX today between Magna stock and Artizia stock.
Magna stock
When it comes to Magna stock, investors are likely looking ahead. The company has a strong outlook, given its exposure to electric vehicle (EV) production. While Magna stock has already seen growth in this area, it still brings in a lot from internal combustion engine (ICE) vehicles as well. Every car has electronic components now, making the transition a seamless one for the company.
There is also an increasing demand for lightweight materials, and Magna stock has taken the call. It’s now a leader in developing and manufacturing lightweight materials, helping to improve fuel efficiency as well as battery life in EVs.
While the stock faces competition on a global scale, here in Canada, it’s an industry leader. And this has been seen in its recent performance. After poor results during the pandemic, Magna stock has been coming back strong. The company reported diluted earnings per share (EPS) of US$0.94, triple the year before. For the year, it hit US$4.23, up from US$4.16 a year earlier.
Meanwhile, shares of the stock trade at 12.84 times earnings and offer a 3.47% dividend yield. Shares are now back to where they were a year ago, seeing growth of 11% since the market bottomed in October. It now looks like it’s a valuable time to pick up the stock, especially for long-term shareholders.
Aritzia stock
Then there’s Aritzia stock, a company that had the opposite position during the pandemic. The company surged with more United States growth than ever. It went on to open more and more locations across the country, seeing shares climb in response. It helps that people such as Meghan Markle seem to wear their stuff as well.
But there’s more than just celebrity status for the company. Aritzia stock is latching on to the continued growth of the women’s apparel market, especially in the United States. This is expected to reach US$2.2 trillion by 2027, driven by more disposable income and increasing demand for online shopping.
Plus, the company is marketed as “everyday luxury,” catering to customers who can afford to pay a premium for quality and design. And now, customers can pick up through online and physical stores, with more plans to expand.
But does it seem too valuable with all this good news? During the latest quarter, Aritzia stock reported EPS of $0.47, which was down from $0.67 the year before. Even so, revenue climbed 5%, despite net income dropping 39%. If you’re wondering if it’s valuable, Aritzia stock certainly thinks so; it recently approved an automatic share-repurchase plan. Still, it trades at 43.53 times earnings over the last year, with shares down 16%. Shares have climbed 67% though since November bottoms, so there could be more on the way.
Bottom line
Aritzia stock, to me, just looks too volatile at these levels. Growth should stabilize in the near future, and when it does so will the stock. And that’s the time I would pick it up. Meanwhile, Magna stock has a stable and bright future ahead — especially through the use of EVs, and that should last for a decade at least! And with a dividend on top, it’s what I would consider on the TSX today.
The post Better Buy in February 2024: Magna Stock vs. Aritzia Stock appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aritzia. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy .
2024