Today’s market is a wild one. The days of perfection where investing really couldn’t go wrong are far behind us. Remember 2018? Those were the days. Even after the pandemic when the market dropped, at least we got to buy low and see our stocks rise. That is, until shares dropped. And the hits just kept coming.
Now today, markets are trading near or at all-time highs! And yet if you look at many stocks individually, it seems that the market is really just being carried along by some of the large-cap companies. However, it’s time to start looking at this in a new light.
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FIRE sale
Now I get it, most of us shop online these days. But even online, we can still be witness to those fire sales. When your favourite brand finally puts everything on sale for like 80% off. Well, that’s what’s going on with a ton of these stocks right now.
In fact, many of the bigger names of the last few years were hit hard mainly because of the pandemic. And now, these Canadian stocks are struggling to work their way back up. Not because these are poor-performing companies, or that earnings are bad, or it’s under poor management. Far from it.
Instead, these are just companies with a bad rap. That means eventually, investors will catch on. And when they do, you’ll want to already have those shares on hand. One of those stocks to consider is BRP (TSX:DOO).
DOO
BRP is the company behind well-known recreational brands like Sea-Doo. This company saw a surge in growth during the pandemic, only to drop once Canadians could no longer afford such luxuries. But that’s left the company with cheap share prices that investors can dive back into.
Take recent earnings. BRP stock recently reported remarkable earnings growth of 268% year-over-year! This reflected the Canadian stock’s ability not only to stay strong, but to scale and capitalize on market demand. And that means there could be more expansion and profitability in the near future.
The Canadian stock posted revenue growth of 4.3% as well, reaching $7.8 billion in annual revenue. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached $843.1 million, showing superb operational management that will convert into more earnings efficiencies.
More to come
So now, this Canadian stock isn’t just performing well, it’s setting itself up for more. BRP grew its top line while also managing costs. Furthermore, its return on equity (ROE) is at 37.5%, and that’s high for investors looking for a proficient stock that can convert financing into profit. So this makes the Canadian stock perfect for investors looking to turn solid returns into profits.
The dividend isn’t huge at 0.94%, but a 31.4% payout ratio means there’s room for growth – thus making it even more attractive for investors wanting income and the potential for dividend growth, as well as returns over time.
Now it’s not perfect. The Canadian stock still holds a negative profit margin of 0.5%, plus a high debt-to-equity (D/E) ratio of 615%! So, no wonder that dividend is low, as the company is growing steadily, but carefully. Investors should therefore continue to watch debt and financial health. But BRP seems to be doing just fine.
Bottom line
Overall, BRP is a strong Canadian stock only getting stronger. There are major opportunities for investors right now, with share prices still at a fraction of where they were even a few years ago. So if you’re an investor looking for a long-term hold at a steal of a deal, now could be the time to jump back in.
