Young investors like millennials mustn’t be afraid to take a bit of volatility with their TFSA retirement funds. The best trait a young investor could have is a strong stomach. If you can endure above-average volatility without getting sick, losing sleep, and having the desire to throw in the towel on your position at any sign of weakness, you’re well ahead of the game, because you’ll be able to buy and hold hyper-growth stocks for prolonged periods of time — something few weak-handed investors can do.
If you’re a young investor, you’re able to place bets on higher-volatility growth stocks, so the only question is, are you willing?
Consider Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS), a promising growth stock with a very encouraging long-term growth story. The luxury parka maker has an exceptional management team led by family businessman Dani Reiss, and as the Goose spreads its wings over the Chinese market, tremendous growth potential awaits those who are patient enough to ride the roller-coaster ride that is the company’s stock.
Higher risk means higher reward, right?
Canada Goose’s chart has been pretty wild over the past year, plunging over 52% from peak to trough before posting a nice +30% rally to where the stock sits now.
Now, such a roller-coaster ride isn’t everybody’s cup of tea, especially for those who tend to sell their losers. Canada Goose stock has the potential to be down by a double-digit percentage without a moment’s notice.
If you’ve got conviction in your investment thesis, however, you should be applauding such a move, so you can take the opportunity to buy even more shares at a lower price.
Why is the Goose worthy of your patience?
Luxury niche items like pieces of Canada Goose outerwear have taken the world by storm, especially China, which has a booming middle class that’s looking to splurge. As Canada Goose continues expanding its brick-and-mortar footprint while continuing to bolster its DTC platform and wholesale channels, it seems like the company can do no wrong.
What about rising tensions with China?
While the Goose is doing everything right at the company-specific level, the exogenous environment is anything but peachy. The U.S.-China trade war is a definite negative for Canada Goose’s medium-term growth, and should Chinese consumers boycott Canada Goose in response to brewing Canada-China tensions, Canada Goose’s stock will likely face even more volatility going forward.
Over the course of many years, I believe the amplified volatility will be worthwhile, especially once market conditions work in the Goose’s favour. In the meantime, management is continuing to do everything in their power to get ready for a push into opportunistic markets like China.
If you’re a young investor who isn’t fazed by the big moves in Canada Goose stock, it may be time to get a bit of skin in the game today. Just make sure you’re ready for seconds should the time come!
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.