Why Roots Has Jumped 14% in the Last Week

Roots (TSX:ROOT) is slowly but steadily climbing at the beginning of 2022, and it’s something analysts expect to continue through this year and beyond.

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Roots (TSX:ROOT) continues to climb higher, with shares jumping 14% in the last week alone for Canada’s retail brand. The company saw recent movement after a TD Securities analyst added the retailer to its Action List Buy category.

What happened?

TD Securities analyst Brian Morrison recently upgraded Roots from a Buy to an Action List Buy in his estimation. Morrison also upped his target price for Roots to $5 per share. And yet, his isn’t the highest; the highest target price sits at $6 per share by National Bank Financial.

It’s causing some to look at Roots once more. The retailer stated it was quite prepared for the coming holiday season during its last earnings report. Should that prove true, there could be a significant bounce back in the stock, that may already be underway.

So what?

But how long can that last? According to these analysts, potentially indefinitely. Roots has strong bullish evidence for the near- and long-term future, planning ahead, even in the midst of supply-chain demands.

During the last earnings report, shares climbed, as the company reported sales up 4.6% year over year to $76.3 million. Further, it saw double-digit growth through its direct-to-consumer segment. The company also reduced promotional days, as supply and demand worsened. Roots then increased adjusted EBITDA to $19.2 million, an increase even from 2019 levels.

Now what?

It could be the time to get in on Roots before it heads towards long-term gains. There isn’t an analyst weighing in on this company as of writing that expects it to rise anywhere under $4 per share. That alone would represent a potential upside of 14%.

The company trades at just 8.87 times earnings and is up an incredible 56% in the last year alone. So, that 14% seems to look like just a drop in the bucket for this Canadian household name.

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 Amy Legate-Wolfe owns TORONTO-DOMINION BANK. The Motley Fool has no position in any of the stocks mentioned.

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