Since the legal cannabis market has yet to stabilize, growth investors may wish to buy stocks in more down-to-earth industries instead for the time being. The data for the following three stocks shows that there is considerable upside to be had in a range of industries — although overvaluation means that this selection may not be suitable for investors with an eye on low multiples.
Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS)
Year-on-year returns of 58% are great to see in any stock, but for this outperforming star of the luxury goods industry, it signals a strong buy. A one-year past earnings growth of 151.5% reinforces the fact that Canada Goose had a great year. That growth in earnings is set to continue, though at a somewhat lower rate, with a 35.9% expected annual growth in earnings. Matched with a 36% past-year ROE, this makes for a high-quality stock.
A comparative debt level of 93.7% of net worth increases the risk of holding this stock for the long term, however. Though there are indeed worse-valued stocks on the TSX index, it has to be said that this is not a stock for value investors, with a high P/E ratio of 66.3 matched with a correspondingly bulky P/B of 24.4, while intrinsic overvaluation is shown by a share price that is double the future cash flow value.
Ballard Power Systems (TSX:BLDP)(NASDAQ:BLDP)
Overvalued by almost twice the future cash flow value, Ballard Power Systems isn’t one for the value investor, but then high-growth stocks are often overvalued, so this should be no great surprise. Even with negative year-on-year returns, it still outperforms the Canadian electrical industry, though it underperforms in earnings for the same period.
A nice, low comparative debt level of only 5.6% of net worth shows that this is a suitable stock for the risk-averse mid- to long-term growth investor, but not so the value investor: a negative P/E ratio and P/B of 5.2 show that this is not the best-valued of stocks on the TSX index. However, with an expected 60.8% annual growth in earnings, you have a great pick for investors looking for high growth.
Wesdome Gold Mines (TSX:WDO)
With one-year returns of 84.2%, and a growth of earnings by 237.2% for the same period — both of which outperformed the metals and mining industry — this has to be one of the most exciting gold stocks on the TSX at the moment. It’s a timely pick, as gold is hitting the headlines all over the place at the moment, making this a top choice if you happen to be looking for upside in the mining industry.
The bottom line
With a P/E of 50.1 and P/B of 3.8, Wesdome Gold Mines may not be what you might call good value, but that really does come with the territory. A low debt level of just 5.5% of net worth makes this a relatively safe stock to hold onto until that growth materializes — around 67% in expected annual in earnings, if you want to put a figure on it. This makes it the stock with the highest expected growth on our list today.
Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.
Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.
One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.
This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.