Canada Goose Is Expanding: Is the Stock a Smart Buy Today?

Canada Goose Holdings (TSX:GOOS) stock is flying low of late but likely not for long.

| More on:
Question marks in a pile

Image source: Getty Images

It’s been a treacherous past few years for shares of luxury parka maker Canada Goose Holdings (TSX:GOOS). With the macro headwinds weighing on all of our wallets, there may not be enough room in the personal budget for a $1,100 (or so) parka.

Indeed, Canada Goose is stylish. It’s a fast-growing brand that’s really taken off at the international level. Still, the business of selling expensive goods makes for huge booms and busts, depending on the state of the broader economy. With a recession on most of our radars, it’s been tough flying for the goose.

Regardless, Chief Executive Officer Dani Reiss is all about the long term. He’s looking to build brand affinity further. Doing so will help the brand really shine at the international level. Once we’re out of this period of stagnant growth, I view stocks like Canada Goose as frontrunners in a market rebound. For now, Canada Goose is doing its best to navigate the rough winds.

Canada Goose flying low again

After its latest round of quarterly earnings, Canada Goose has been shot down right back to the $25 per-share range, where the name spent most of last year’s second half. Though Canada Goose stock’s breakout has failed, I still think long-term thinkers have plenty of reasons to be a buyer of the latest dip, even if the worst of recession headwinds have yet to strike.

It’s hard to time your entry into battered discretionary stocks. They tend to implode and take off very quickly. If you’re a believer in the brand and growth story, and you’re willing to deal with the huge bumps in the road (1.57 beta, meaning GOOS stock is a choppier ride than the rest of the market), I view GOOS as a compelling name, as the Canadian growth story looks to evolve amid hard times en route to “tripling” sales over a five-year timespan.

How will Canada Goose triple revenues over five years, with a recession on the horizon? Expanding into new product categories is one way that the company can take its growth to the next level, as it looks to capitalize on brand affinity.

Canada Goose eyes eyewear, accessories, and other product categories

Canada Goose has stayed within its circle of competence (outerwear) but seems willing to explore new arenas for growth amid its share slump. In prior pieces, I’ve suggested that Canada Goose go beyond expensive outerwear. Recently, the firm noted its plan to get into eyewear, accessories, and luggage sales.

Such a move is incredibly smart, in my opinion. However, a further push into new products may be needed to reduce seasonal lumpiness in shares of the luxury outerwear maker.

Now, it’s not like Goose is making a huge splash with swimsuits to bolster sales into the summer season. Such a move would be bizarre and could have an effect on brand affinity. Luggage, eyewear, and other offerings seem like natural areas to move into. With such a strong brand, I think loyal consumers will be very interested in adding to their collection of Canada Goose-branded merchandise.

As always, I expect new products to be of the utmost quality. Further, such items could command a pretty penny, as they look to add a sustained boost to the top and bottom line.

Bottom line

As Canada Goose expands its merchandise lineup while the worst of recession headwinds move on, I think the stock makes for a terrific buy at these depths. Add the Chinese reopening into the equation, and I think the future looks bright for Canada Goose.

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. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

edit Sale sign, value, discount
Energy Stocks

2 Cheap Canadian Stocks You Can Buy for Less Than $50

You can buy Suncor Energy stock, and this gold stock at cheap valuations today

Read more »

A airplane sits on a runway.
Stocks for Beginners

Are Airline Stocks a Good Buy in March 2023?

Few companies have felt the pandemic as much as airlines. But now that markets are open, are airline stocks a…

Read more »

Happy diverse people together in the park
Dividend Stocks

Gen Z Investors: How to Make $2.8 Million Before Retirement

Gen Z investors have one thing to their advantage: time. Invest wisely and practically any investment could turn into millions.

Read more »

A plant grows from coins.
Dividend Stocks

The 2 Top Monthly Dividend Stocks for March 2023

These are the top two monthly dividend stocks you can buy in Canada in March 2023.

Read more »

Target. Stand out from the crowd
Investing

If I Could Only Buy 1 Stock Right Now, This Would Be it

Are you looking for that one stock to add to your portfolio? This would be my top pick right now.

Read more »

Canadian Dollars
Dividend Stocks

Got $6,500? Earn $48/Month Tax-Free Passive Income

High-dividend-paying Canadian stocks include Diversified Royalty. Let's see how a TFSA investment of $6,500 can help you earn $48 in…

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Better Buy: Shopify vs. Constellation Software

Are you interested in buying a tech stock? Find out which is the better buy between Shopify and Constellation Software.

Read more »

Piggy bank next to a financial report
Bank Stocks

U.S. Bank Meltdown: These 2 Canadian Banks Are Safer

Canadian banks like Royal Bank of Canada (TSX:RY) are safer than the collapsing U.S. banks.

Read more »