Millennials: Why Canada Goose Holdings Ltd. (TSX:GOOS) Is a Smarter Bet Than Cannabis Stocks

Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) is the one growth stock that you’ll want to own forever in your TFSA.

| More on:
Value for money

Image source: Getty Images

Apart from marijuana stocks, Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS) has arguably been the sexiest Canadian stock that our neighbours south of the border have been talking about over the past two years.

The maker of down-based parkas meant for arctic expeditions has grown into a luxury fashion statement across various chilly markets around the world. And with many untapped markets full of growth potential (like China) on the horizon, there are still many reasons to believe that the Goose’s best days are just ahead of it.

As for marijuana stocks, I think the best is already in the rearview mirror, and as the pot (a commodity) market gradually moves towards an equilibrium – an event that would be catastrophic for all cannabis companies.

How high can the Goose fly?

The reason Canada Goose has been making so much noise in the years since its IPO is because of the incredible year-over-year sales growth that the company has been clocking in. Of all the Canadian growth names out there, the only comparables to the magnitude of growth exhibited by Canada Goose are the pot stocks. But unlike pot stocks, there’s no haze of marijuana smoke that’s clouding Canada Goose’s growth runway.

Furthermore, given the highly differentiated nature of Canada Goose’s outerwear offerings, I think the odds of the Goose trade going up in smoke are vastly less than any marijuana play, which I see as a mere commodity producer at this juncture.

In addition, I also see Canada Goose sustaining its huge growth numbers a lot longer than any pot producer. The way I see it, pot stocks are getting ready to wind down as pot supply meets demand. Meanwhile, Canada Goose will be ready to soar higher as its wings spread across the red-hot Chinese market, which can’t get enough of the Goose’s outerwear.

While there are undoubtedly hurdles ahead for Canada Goose, such as uncertain economic conditions in the Chinese market, I believe that Canada Goose is less of a speculative bet than many may believe it to be. The stock is insanely expensive at 11.1 times sales, but when you consider how much longer the high double-digit top-line growth numbers could be sustained as the Goose spreads its wings wider, the premium doesn’t appear as ridiculous as it would when compared to any pot stock.

Foolish takeaway on Canada Goose

The recent gloomy headlines on China, I believe, has created an opportunity to get into Canada Goose stock at a fairly decent price relative to the expected growth moving forward. Yes, Canada Goose is very much a China play, and once a China-U.S. trade deal is reached (I think it’ll happen next year), it’s off to the races for Canada Goose.

As for pot stocks, they’ll likely go out in smoke years before Canada Goose runs out of gas.

Stay hungry. Stay Foolish.

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 Joey Frenette has no position in any of the stocks mentioned.

More on Cannabis Stocks

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Coworkers standing near a wall
Cannabis Stocks

Why Is Everyone Talking About Canopy Growth Stock?

Canopy Growth stock (TSX:WEED) saw shares surge in the last two weeks for a variety of reasons investors can dig…

Read more »

Pot stocks are a riskier investment
Stocks for Beginners

Why Shares of Cannabis Stocks Are Rising This Week

Cannabis stocks received a boost this week as the White House urged the drug enforcement administration to reschedule the drug.

Read more »

A person holds a small glass jar of marijuana.
Stocks for Beginners

Why Canopy Growth Stock Jumped 16% on Wednesday

Canopy Growth stock (TSX:WEED) is up 16% on Wednesday, adding to a surge of 60% growth in the last week…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Is the Worst Over for Canopy Growth Stock?

Down 99% from all-time highs Canopy Growth stock has burnt investor wealth and remains a high-risk investment.

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Steer Clear: This Stock Spells Trouble

A newly listed cannabis stock is outperforming in 2024 but investors should stay clear to avoid trouble and losses.

Read more »

Cannabis stocks have fallen.
Cannabis Stocks

2 Best Marijuana Stocks to Buy This Month

Marijuana stocks in the U.S. such as Green Thumb and Curaleaf can help you deliver outsized gains to investors in…

Read more »