One of the more impressive under-the-radar Canadian stocks many investors may not be paying attention to right now is Kits Eyecare (TSX: KITS). That’s unfortunate, considering the stock chart below. Boom.
Looking at this chart above, and Kits Eyecare’s more than 90% surge on a year-to-date basis alone, it’s hard to ignore this stock much longer. Let’s dive into whether this company, valued at around $500 million, is worth investing in right now.
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A small-cap stock with big-time growth
One of the key reasons why Kits Eyecare has seen the kind of share price appreciation it has of late is the company’s impressive revenue growth of more than 30% over the past year. As one might expect with such a surge, investors are betting that the company’s line of progressive and contact lenses, eyeglasses, and frames under the KITS brand, as well as other eyewear products of various brands, should continue to see strong growth over time.
Thus far, most of Kits’s strong growth has come from the Canadian market. With more Canadian consumers taking a “buy at home” approach to goods and services, this is a trend that’s disproportionately benefited Kits Eyecare and could be a sustainable trend moving forward. At least, that’s what the market appears to be pricing in right now.
What do the fundamentals say?
Unlike other fast-growing companies with mostly top-line growth, Kits Eyecare is actually turning a profit. But given how fast this company is growing, the company’s price-earnings multiple is high (in the triple digits), so that’s something to keep in mind.
Investors don’t seem to mind, so long as Kits Eyecare can continue to put up adjusted EBITDA growth over time. Indeed, the past 11 quarters have provided investors with positive adjusted EBITDA, and this is another trend that looks sustainable from here.
If Kits Eyecare can continue to expand its customer base and grow its product portfolio, this is a growth stock that could certainly have more room to run from here. In my view, this is one growth stock to consider adding on pullbacks moving forward. For those more aggressive growth investors out there, I don’t see why buying this stock at current levels would be frowned upon.
