JWEL:CC - 1 Growth Stock Down 15.8% to Buy Right Now
2024-03-21 17:15:00 ET
The healthcare market and wellness industry generally experienced a boom during the global pandemic. COVID-19 motivated nearly everyone to prioritize health, protect immune systems, and change lifestyles. Investors gravitated towards the healthcare sector and other stocks in various sectors with health-related businesses.
Jamieson Wellness ( TSX:JWEL ) rose to prominence at the height of the coronavirus breakout. Investors suddenly focused on the manufacturer, distributor, and seller of natural health products. In 2020, the consumer-defensive stock delivered a fat 42.4% capital gain.
Growth stock
A promising growth stock was born during the COVID period. Because of the heightened interest in health and wellness products, Jamieson’s revenue in 2020 increased 17% to $403.7 million versus 2019, while net income rose 31.4% year over year to $41.6 million.
Its President and CEO then, Mark Hornick, said more than three years ago, “The COVID-19 pandemic has elevated health and wellness to become the top priority for consumers globally, and we are grateful for the role our brands play in supporting our consumers’ foundational health.”
Post-pandemic, investors’ interest in Jamieson waned, although it has remained profitable since 2020. Today, at $26.56 per share, the $1.1 billion company also pays a decent 2.66% dividend. Unfortunately, the stock trades at a discount (-15.8% year to date). Fortunately, the stalled growth could resume in 2024 and beyond.
Strong financial results
In Q4 2023, revenue and net earnings climbed 14.3% and 8.6% respectively to $220.4 million and $24 million versus Q4 2022. While the top line last year grew 23.5% year over year to $676.2 million, net earnings declined 12.8% to $46 million compared to 2022.
Still, current President and CEO Mike Pilato said, “2023 was a reflection of success on our strategic journey to become a global vitamin, mineral, and supplement leader. We drove growth across all our major markets and business units while successfully completing our 2022 U.S. acquisition integration and taking ownership of the full value chain in China.”
Pilato said further, “We are entering 2024 from a position of strength – strategically, operationally, and financially.” The diversification strategy and journey to expand the global footprint and increase market share beyond the home country are ongoing. Notably, international markets account for 40% of total branded revenue.
Jamieson will continue to prioritize investment in demand generation, innovation, and distribution in all our major markets to harness the full potential of the evolving needs of engaged consumers and significant industry growth tailwinds. Expect aggressive investments to grow its brands in the U.S. and China.
Business Outlook
For 2024, Jamieson Wellness projects consolidated revenue between $720 million and $760 million, or roughly 6.5% to 12.5% growth. The revenue growth guidance for Jamieson is from 12% to 18% or from $615 million to $650 million. Furthermore, business growth in the U.S. (13% to 20%) and China (60% to 80%) will outperform the Canadian market (4% to 7.5%).
After this year or in 2025, management anticipates a return to low double-digit growth, although Jamieson Brands will continue to drive growth and profitability. The company’s broad product scope and strong innovation capabilities enable it to respond to changing consumer trends, preferences, and spending.
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Fool contributor Christopher Liew 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 .
2024