Insider Pick: Massive Upside on the Horizon!

This company’s CEO and a private equity group own almost half of the stock of this Canadian growth gem!

| More on:
analyze data

Image source: Getty Images

Whenever a stock’s insiders own nearly half of a company, investors ought to take notice. In the case of Canada Goose (TSX:GOOS)(NYSE:GOOS), insiders own approximately 46% of the shares of the company. These shares are held by the company’s CEO and a private equity firm.

I’m going to discuss why this is important — and why individual investors ought to care.

Management should put its money where its mouth is

Any CEO claims that he or she believes in the company they manage. To own a significant chunk, and stay heavily invested is another story entirely.

I like focusing on who owns the shares of a given investment I’m looking at. This helps tell me to what extent I believe a given company’s management team is truly drinking the Kool-Aid. Just wearing the company t-shirt at corporate events isn’t enough. Having financial exposure to the gains and losses of the company one manages is far more important.

In this context, Canada Goose looks like just the type of company I want to own. Having long-term shareholders on one’s side

Massive upside on the horizon?

As fellow Fool contributor Ryan Vanzo suggested in a recent article, a doubling of the company’s stock price in a few months in 2020 was warranted. As well, Vanzo suggests that another doubling could be on the horizon, though perhaps at a slower pace than in the past.

I couldn’t agree more. I think this stock is poised to take advantage of outsized growth in the luxury sales market in 2021. Canada Goose is growing domestically and internationally at absolutely incredible clips. The fact that international sales continue to skyrocket at more than 50% a year I think is sustainable for the foreseeable future.

Growing sales in Asia will continue to be the focus of Canada Goose, as the company looks to improve on its already impressive 33% annual revenue growth rate. As international markets become a bigger piece of the pie for this company, investors will be able to tap into a source of unprecedented growth in retail in Canada.

Other bullish catalysts

Growing e-commerce sales are also bullish for Canada Goose investors. This company has done an incredible job of improving its online offerings, lowering its cost profile along the way. Avoiding hefty rents in expensive international flagship locations via focusing on online sales could boost margins further. I see continued margin enhancement, as well as aforementioned parabolic revenue growth, as the two key investment theses for this stock right now.

Additionally, Canada Goose has done an incredible job of bringing manufacturing in-house. By controlling more of the supply chain, this company has increased its margins while simultaneously improving on some logistical problems which hampered shares in the past. Canada Goose’s operating margins have improved substantially of late as a result of these moves.

Accordingly, further margin expansion could be on the horizon. This is because I think Canada Goose has only capitalized on the tip of the iceberg right now.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Canada Goose Holdings.

More on Investing

stock research, analyze data
Tech Stocks

3 No-Brainer U.S. Stocks for Canadian Investors

Tech stocks may not seem like the best option right now, but these U.S. stocks are simply no-brainers in this…

Read more »

Man making notes on graphs and charts
Dividend Stocks

Put Your Cash to Work: 3 Cheap TSX Stocks (With Dividend Yields of +5%) to Buy Now

Make your money work for you. Earn over 5% dividend yields with these under-$20 stocks.

Read more »

exchange traded funds
Stocks for Beginners

How to Start Investing with Little Money

These all-in-one ETFs are ideal for new investors with a small amount to invest because they reduce risk while taking…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

3 TSX Tech Stocks That Could Soar

The tech sector is still heavily discounted, though the scale of discount and recovery potential may vary significantly from stock…

Read more »

Canadian Dollars
Stocks for Beginners

Where to Invest $1,000 for the Next 5 Years

Are you wondering where you should put $1,000 for the next five years? Here are three top picks!

Read more »

Investing

Defensive Stocks: 2 of the Best REITs to Buy Now

These two defensive stocks can protect your money and offer attractive passive income, making them two of the best REITs…

Read more »

grow dividends
Investing

4 Cheap Canadian Stocks That Can Still Grow Their Earnings Next Year

While economic growth is expected to slow significantly in 2023, these four Canadian stocks are cheap and have significant growth…

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

2 Oversold TSX Stocks for TFSA and RRSP Investors to Buy Now

These top TSX dividend stocks look oversold.

Read more »