Is Canada Goose a Buy at $30?


Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) has seen its share price get cut in half over the past 12 months. At around $30 per share, it’s nowhere near the $95 that it traded at back in late 2018.

The reality is that Canada Goose won’t soon reach those heights again – if ever. With a recession almost a guarantee at this point thanks to the coronavirus pandemic, the market for $1,000 parkas is going to take a hit.

And that means Canada Growth’s stock growth rate is going to be impacted for at least the next couple of quarters, perhaps years. That’s bad news for a growth stock, as strong sales are what propelled Canada Goose to a high valuation in the past.

Currently, the stock trades at around 20 times its earnings. Previously, it wasn’t unheard of for investors to pay 50 times earnings or more for the stock. But that’s not likely to happen until the company gets back to a growth rate of at least 30% or more.

The good news is that with a strong direct-to-consumer segment, Canada Goose doesn’t need retail stores to be operating at 100% for the company to move its products.

But unless investors are willing to hang on to Canada Goose for at least a couple of years, it’s likely going to be a hard road ahead for the company to wait out this pandemic and for the Canadian and U.S. economies to recover from it. And with the market not likely done tanking, investors may be better off waiting for the stock to fall further down before buying it.