Want to Cash in on the Health & Wellness Craze? Buy This Stock

Jamieson Wellness Inc (TSX:JWEL) is a market leader in an attractive industry. A recent dip has provided a limited-time buying opportunity.

| More on:
You Should Know This

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The global wellness industry is now worth $4.2 trillion. Since 2015, the market size has grown by roughly 13% annually. Incredibly, the industry now accounts for 5.3% of global economic output.

Do you own stocks exposed to this mega-trend? If not, you should, as wellness is becoming an integral part of nearly every consumer’s life.

According to a senior research fellow at GWI, “In the last few years, wellness has become a dominant lifestyle value that is profoundly changing consumer behavior and changing the markets.”

If you’re wondering where to begin, allow me to introduce you to Jamieson Wellness Inc (TSX:JWEL).

Jamieson Wellness has one big advantage

Founded in 1922, Jamieson is now the largest health and wellness company in Canada with an impressive 25% market share of vitamins, minerals, and supplements within food, drug, and retail stores. This scale is a huge advantage in a market dominated by trust and reputation.

As one of the largest competitors, Jamieson can afford to invest in state-of-the-art manufacturing facilities while reinvesting in research and development to innovate new products faster than its peers. It can also pay for stringent certification and verification programs to ensure consumers that its products are held to the highest safety standards.

Scale has also enabled the company to sell globally. Today, its products are exported to more than 40 countries.

Currently, its business is roughly 80% branded. These sales are incredibly high margins, giving it the ability to generate repeat sales via trusted brands. The other 20% of its business is derived from co-manufacturing partnerships. Because Jamieson owns and operates its own facilities, it can partner with large consumer health companies and retailers to create products that fit their exact needs.

In summary, scale matters. As the market leader, Jamieson enjoys advantages that few other competitors are capable of tapping.

Is now the time to buy?

In 1997, sales for the company stood at just $20 million. This year, revenue should surpass $340 million. Earnings and cash flow have followed suit. Over the past 12 months, EBITDA has grown by 10.8% while net income has increased by 36.3%.

Over the past six months, however, shares have fallen by around 30%. Based on adjusted earnings per diluted share, the stock trades at 22.7 times trailing earnings. The TSX average, meanwhile, trades at an average of 21.4 times trailing earnings.

Analysts estimate that the TSX average should grow EPS by 6% to 10% in 2019. Jamieson, for comparison, should grow earnings by around 18% this year. Given its exposure to a rapidly growing industry, as well as early footholds in potentially massive markets like China, I’d expect the company to maintain a double-digit growth rate for years to come.

Shares may not be cheap, but that’s the price you pay for market leader in an attractive industry. With the recent dip, you aren’t paying much more than the average TSX stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Investing

money cash dividends
Dividend Stocks

2 Passive-Income ETFs to Buy in 2022

Unlike stocks, distribution-focused ETFs may not offer an equally healthy capital-appreciation potential, but they might still be worth buying.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

RRSP Investors: 2 Top Total-Return Stocks to Build Retirement Wealth

These top TSX dividend stocks offer high yields and currently trade at discounted prices.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

The 3 Best TSX Dividend Stocks That Pay Cash Monthly

Looking to earn monthly passive income from top dividend stocks? Here are three fresh ideas for July 2022.

Read more »

Cogs turning against each other
Dividend Stocks

2 Resilient Value Stocks That Could Weather the Storm

The resilient businesses of two value stocks can help you endure recessionary pressures and deliver superior returns in 2022.

Read more »

exchange traded funds

3 Must-Buy Bank of Montreal ETFs to Ride Out a Recession

Passive investors may wish to buy BMO Covered Call Canadian Banks ETF (TSX:ZWB) and two other incredible ETFs that right…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: Fortify Your Portfolio by Building a 2nd Pension

One of the best ways to utilize your retirement savings without depleting them is to invest them in dividend stocks.…

Read more »

Man holding magnifying glass over a document
Stocks for Beginners

The Valuation Conundrum: P/E Ratio vs. P/S Ratio

Did you buy a stock with low P/S ratio and make a loss? Most investors fall prey to the valuation…

Read more »

growing plant shoots on stacked coins
Energy Stocks

Buy the Dip? 2 TSX Energy Stocks With Fast-Growing Dividends

TSX energy stocks have seen a double-digit decline in June. Here are two stocks with incredibly fast-growing dividends to consider…

Read more »