Can Value Investors Make the Case to Own Canada Goose Stock Right Now?
The stock price of Canadian apparel maker Canada Goose (TSX:GOOS)(NYSE:GOOS) has been on an absolute tear of late. The company reported its third quarter earnings last week, and beat estimates handily. So handily, in fact, the company’s stock price jumped almost 30% on Thursday alone.
This is a company that has been under pressure last year due to the pandemic. Investors saw a real potential for luxury sales to take a hit, given the economic uncertainty the pandemic provided and a lack of discretionary consumer spending that was expected to take hold of retailers like Canada Goose.
However, Canada Goose has proven the strength of the company’s brand via direct to consumer sales in emerging markets (particularly China), and the growth in the company’s growing e-commerce business. The numbers Canada Goose posted in these channels surprised the market in a good way, and I think Canada Goose has shown resiliency through the strength of a brand that appears to be stronger than many thought initially.
Indeed, I view the Canada Goose brand as the core strength of this company, providing a pretty decent moat, or durable competitive advantage, relative to its peers. This isn’t just some fashionable brand that may lose its luster with consumers. Rather, the Canada Goose brand looks like a long-term player in the luxury outerwear business.
As far as retailers go, Canada Goose is one of the most desirable today, and probably deserves its multiple. I don’t know if this would qualify as a value pick, but looks to be a high-quality long-term growth pick today.
Invest wisely, my friends.
