Jamieson Wellness (TSX:JWEL) has been one of the best buys on the TSX this year. Year to date, its shares are up around 50%, blowing past the TSX, which has declined 5% during the same period.
It’s a sharp increase for Jamieson, closing trading on Friday at $38.53 and less than a couple dollars away from its 52-week high of $40.25. With the stock trading at a forward price-to-earnings of 30 and more than five times its book value, it’s worth asking the question if this stock’s gotten too expensive.
On August 12, the company released its second-quarter results for the quarter ended June 30, where sales of $93.2 million were up 22% year over year. Its adjusted EBITDA of $19 million also grew by 15.8%. Jamieson’s benefitted from people stockpiling on pills and vitamins amid the coronavirus pandemic as consumers are concerned about potential lockdowns and shortages, especially when it comes to day-to-day essentials and healthcare products.
The company’s been doing so well that Jamieson upgraded its guidance for the year.
Previously, it was expecting its annual revenue to come in as high as $376 million. It’s revised that number, now expecting its top line to come in somewhere between $385 million and $395 million. In addition, the company has also increased its dividend payments by 1.5%.
However, despite the optimism and strong results, Jameson isn’t a stock that I’d be rushing out to buy today. Once concerns surrounding COVID-19 subside and things in the economy start getting back to normal, this strong sales growth is likely to slow down.
While Jamieson is a good long-term investment to hang on to, at its current valuation, the price may be too high to buy the stock right now.
