By now, you’re probably familiar with the sexy, albeit insanely priced marijuana stocks that have been drawing massive crowds of young investors from around the world. Millennials love marijuana stocks because they think that there’s a quick buck to be made despite the high risks involved.
What you (and many other millennials) may not be as familiar with are the stocks on the other side of the spectrum.
You know, the cheap stocks that nobody talks about but are warranting of an upside correction (is that even a term?). Of course, nobody, including those in the mainstream financial media, will draw any attention to such plays until after the fact – after the company under question clocks in a quarter to remember. However, by the time you hear of the “spiffy pop” it’ll be too late to score the big excess risk-adjusted returns for yourself.
This piece will discuss an extremely out-of-favour stock that everybody seems to have forgotten about. The value proposition on this name, I believe, is huge, and for those with time and the stomach, there are major rewards to be had. Perhaps, even more relative to marijuana stocks at this juncture.
So, without further ado, enter Jamieson Wellness (TSX:JWEL), the legendary Canadian vitamin, mineral, and supplement (VMS) maker that’s been doing its thing for nearly a century.
I know, it’s hard to get unsexier than vitamins.
As a young Canadian, you’re probably aware of the green-capped supplements in your medicine cabinet, but what you may not know is just how much growth the company is capable of over the next decade and beyond.
The stock recently clocked in a quarter to remember, sparking a nice pop higher, but has since surrendered these gains and is flirting with 52-week lows again for no fundamentally sound reason. I know it’s hard to “love” a vitamin stock, even if the fundamentals and growth prospects are sound, but for those willing to go against the grain, I think there’s plenty of upside to be had.
The company recently won a “best new product award” from Branspark International for its “Essentials + Protein” offering, which has been a hit with millennials, a generation that loves their protein. This isn’t the first award that Jamieson’s taken home. Just a few years ago, the company won the same award for its Omega-3 supplements that were praised for their lack of aftertaste and those annoying “fishy burps.”
It’s clear that Jamieson is an innovative company, and with plenty other new products coming down the pipeline, I think there’s ample room to beef up the top line as the company better-caters toward various trends in the industry.
In terms of catalysts, Jamieson also gets an “A” grade. The company is expanding into China, a market where Jamieson is already a top foreign brand, with a lineup of offerings that’ll only swell with time.
Furthermore, management is eating their own cooking, with over $2.2 million in insider buys over the past year versus just $85,200 in insider sells. Jamieson is a stellar, but out-of-favour growth play probably deserves to trade at more than 26.4 times trailing earnings and 2.2 times sales.
As other young investors look to the sexy play, I’d go with Jamieson. It’s a green bet that I think has more pop over the long haul. Best of all, you won’t need to fret should the cannabis trade suddenly go up in smoke.
Sometimes boring is beautiful and unsexy is sexy. At least, that’s what smart investors think is the case with their investments.
Stay hungry. Stay Foolish.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned.