Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) has been soaring since it released its quarterly results last month. Year-to-date the share price has doubled and it shows no signs of slowing down just yet.
Although the stock trades at nearly 100 times its earnings and nearly 40 times book value, investors continue to buy up the share. Expectations are sky high for Canada Goose as the company has proven that consumers can’t get enough of its quality handmade products. And news that the company is expanding into China could open up even more opportunities.
At over $80 a share, the stock would need to rise another 25% to hit $100. From a value investor’s point of view, it seems ludicrous to expect that the stock price could continue to rise to even more obscene levels.
The stock did hit a peak of over $91 last month and has come down since then, and while the share price may have stabilized for the time being, there’s still a lot of bullishness surrounding the stock.
Strong growth is hard to find, particularly on the TSX where you don’t have the exciting tech stocks that you’d find on the NASDAQ, so investors have flocked to what’s been one of the top stocks on the exchange this year.
Overall, Canada Goose is a terrific stock with lots of potential growth ahead of itself. Its direct-to-consumer segment has helped the company achieve strong margins and its numbers will only improve as those sales continue to grow.
However, the stock is simply too expensive a buy for it to be a good investment today. While it may hit $100, I believe it’s likely we’ll see a correction soon.
