2 cheap stocks to buy before a Santa rally

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the S & P / TSX Composite Index is still in correction mode. After hitting historic highs, the index is down 6% to where it is at the time of writing. But there is one thing Motley Fool investors can generally expect every year for a rebound, and it may already be underway. It is the gathering of Santa Claus.

The gathering of Santa Claus takes place during the holidays for various reasons. For the crowd the glass half full is generally a positive attitude towards the New Year. For people with a half-empty glass, this is usually linked to more sales at this time of year. With money in hand, each party wants to put money aside for investment. But you have to find the right cheap stocks to buy.

So today I’m going to take a look at some cheap stocks you might want to consider before the Santa Rally sends them up.

Shopify

Shopify (TSX: SHOP) (NYSE: SHOP) certainly has a few reasons to keep tech stock on your wishlist. From the outside, this certainly doesn’t look like one of the cheap stocks to consider on the Santa Claus rally. However, given its current performance in an era of supply chain disruption, I would say it certainly is.

Shopify’s inventory has exceeded expectations during sales from Black Friday to Cyber ​​Monday. The company achieved record sales of $ 6.3 billion. This is a 23% year-over-year increase from 2020 and double the levels of 2019. Plus, the holidays are not over yet. Shopify stock has new enhancements to make sure customers get their products on time for the holidays, and it offers easy ways to find what you’re looking for with new research methods.

Still, stocks are down 15% from all-time highs, providing a good time to jump on this stock. When the Shopify stock releases another solid earnings report in the next quarter, you’ll wish you jumped on it before the Santa Gathering.

Aritzia

Honestly, I would always consider Aritzia (TSX: ATZ) one of the cheap stocks to buy ahead of Santa’s rally. Yes, it is trading near historic highs. However, its recent earnings report proves that even bigger growth is likely to be underway.

In its last earnings report, Aritzia skyrocketed thanks to incredible growth in the United States and in the e-commerce sector. Net revenue grew 75% year over year, with e-commerce revenue up 48.7%. Adjusted EBITDA exploded, more than double the previous year and nearly five times the previous quarter.

Now, investors have Black Friday sales and holiday sales to look forward to for the next quarter. This could see revenues rise again and another major increase in the share price. The latest earnings report, Aritzia climbed 22%. Shares are now up 104% year-to-date.

Take away food

These two cheap stocks might not have a very low share price, but based on future growth and valuations, they are solid buys, especially as the Santa rally draws closer. . The holiday sales are coming, and Shopify and Aritzia’s inventories are expected to see their sales increase massively with the daily opening and growth of retail and e-commerce stores.


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