Whether or not 2022 pales in comparison to 2021 on a returns front remains to be seen. Regardless, there’s a strong case for investors to consider the many names on the TSX Index that may actually be considerably undervalued. On this side of the border, valuation metrics are more tame, providing investors with a compelling returns runway, even if we’re dealt next to nothing (or even negative returns) over the next 12-18 months.
Without further ado, let’s have a closer look at vitamins, minerals, and supplements (VMS) maker Jamieson Wellness (TSX: JWEL) and luxury parka maker Canada Goose Holdings (TSX: GOOS)(NYSE: GOOS) — both names that have begun to show signs of a significant turnaround after a rather choppy past year or so. Although both names may be in for a near-term pullback after their recent pick-up in momentum, I think both are worthy of adding to your watchlist. And if you’re keen on the value to be had in either name, it could make sense to start doing some buying today and gradually over the next year, as you look to average down your cost basis.
The two TSX stocks that are coming back couldn’t be more different, but both firms, I believe, could be in a spot to do better than the averages in 2022 — a year that many are already dismissing as a lacklustre year for stock markets.
Jamieson Wellness
Jamieson Wellness isn’t just a boring company in an old, commoditized industry. The company has a solid brand built over many decades. Indeed, brands can separate the winners from the losers in an industry that’s commoditized. Warren Buffett is a huge fan of such brands, and Jamieson, I believe, is somewhat akin to the Coca-Cola of the VMS industry, with its signature green cap products.
There’s no question that health consciousness was on the minds of many consumers, specifically millennials and baby boomers, well before the pandemic happened. Amid COVID, the importance of a robust immune system and health-conscious trends have become that much more pronounced. Indeed, the pandemic may have given Jamieson a bit of a long-lasting jolt, as the firm continues its epic expansion.
Indeed, the publicly traded Jamieson could grow at an impressive rate. And I don’t think the modest 34.2 times trailing earnings multiple reflects such low-tech growth prospects. At shy of $40 per share, I’d look to nibble into a position, as the 2021 laggard (up just 6% year to date) looks poised to make up next year.
Canada Goose Holdings
Speaking of powerful brands, Canada Goose is a top dog in the global outerwear market, with its unmistakable parkas, vests, and other outerwear. Helped by many Hollywood stars and celebrities who proudly don their products, Canada Goose has built a brand with minimal marketing spend. It’s remarkable how the relatively small Canadian brand is evolving into an international icon and status symbol.
Given the steep price of its products, Canada Goose is very cyclical, leaving it prone to big booms and busts. After shedding around 77% of its value from its 2018 peak to its 2020 trough, I believe the downcycle is over with and that we’re at the start of what could be a very prosperous upcycle for the $6.9 billion winterwear firm.
Even after the recent 38% spike, GOOS stock still seems attractive in my books. If you’re keen, I’m not against doing some buying here, but I would much prefer a mild pullback that could be in the cards going into the year-end.
