The consumer is in a sticky spot going into 2024, with macro headwinds and the threat of a potential recession. Undoubtedly, markets have been a bit wobbly in recent years ahead of such a recession that’s yet to rock us. Only time will tell if the period of economic sluggishness takes another bite out of market valuations. Regardless, investors should focus on the next 10 years rather than looking to avoid losses or book quick gains over the next 10 weeks.
Indeed, new investors ought to view stocks as pieces of businesses to be held for years (or decades). And by minimizing trading in and out of stocks too frequently, one can stay out of one’s way and let their investments do their thing.
Going into 2024, it may feel a bit more comforting to put new money to work. We just had a glorious 2023 of relief gains concentrated in mega-cap tech. If you’re light on such plays, though, the relief your portfolio experienced this year may not be so glorious. In any case, the risk/reward scenario seems somewhat less appealing than at the end of last year, when it seemed like the stock rally off October’s lows was not to be trusted, according to numerous pundits on Wall Street.
Today, we have a mix of cheap stocks and extremely pricey, perhaps borderline bubbly stocks in the tech sector. The good news is you don’t need to pay up for the overheated tech plays, many of which have been driven higher by AI hype and hopes of lower rates in the near future. In this piece, we’ll consider one battered consumer stock that is cheap and could have room to run if the economy doesn’t slow at a pace that’s a cause for any alarm.
Canada Goose Holdings
Canada Goose Holdings (TSX:GOOS) is a luxury parka maker that many investors may have scratched off their shopping lists in recent years, thanks to the multi-year sag in the stock. When times are tough, demand for pricey parkas may not be in a spot to keep investors hanging onto their GOOS shares.
Year to date, the stock’s sag has continued, with shares falling nearly 40%. Since its 2018 peak, the stock has lost more than 80% of its value. That’s an epic collapse that likely left a bad taste in the mouths of investors.
The good news is that demand for high-end outerwear is unlikely to stay depressed forever. Once consumers have more than enough disposable income, GOOS stock could begin flying higher again. Until then, there’s only so much the retailer can do.
The brand is robust, but clearly not 100% secure from macro headwinds. Further, the expansion into other product categories hasn’t really excited investors quite yet. Over the long run, I expect such a move could help drive shares higher come the next economic boom.
The Foolish bottom line
The consumer may be down but don’t count them out. As the slowdown works its course, we could start seeing people spending money on luxuries (like Canada Goose) again. For now, you’ll need to be very patient if you want to wait for the Goose to flap its wings again.
