Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS) has been one of the hottest stocks on the TSX this year, soaring around 50% since January. Although economic conditions may not be ideal for the company’s high-priced apparel, a beaten-down valuation over the years has allowed it to bounce back of late, especially with some encouraging news coming out recently.
Back in August, the stock took off after news came out that the company’s controlling shareholder, Bain Capital, was reportedly looking to sell its stake in the business. And it could result in the company going private. The reported valuation would be around $1.4 billion USD, which is around where the stock trades right now. Anytime there’s a reported acquisition or buyout, a stock will usually rise to those levels, unless investors doubt that the deal will go through.
But despite the recent rally, the stock is still nowhere near where it traded years ago and over the past five years it’s down more than 40%. However, for investors who have been hanging on, it’s some encouraging news nonetheless.
The company has struggled with generating much growth in recent years and its margins have been low. If not for these recent developments, the stock would likely not be doing as well as it has been of late.
Unfortunately, this also means there’s not much more upside left for investors to buy the stock today. Unless the reported purchase price rises higher, Canada Goose’s valuation will likely remain around $1.4 billion USD for the foreseeable future. And if a deal doesn’t end up happening, the stock could also end up giving back some of the recent gains.
While it has been hot in recent weeks, Canada Goose’s stock may have hit a peak, at least in the short term.
