Jamieson Wellness Inc T.JWEL

Stephen Takacsy - BNN - TOP PICK

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TOP PICK

Jamieson Wellness(JWEL-T)

11/12/2024

 

Huge margins and free cashflow. Growing business annually compounded at over 15%. International expansion. US acquisition is growing double digits. Online China business growing 80%. Never been cheaper at 17x forward PE. Takeover potential in a few years. Yield is 2%.

(Analysts’ price target is $40.82)

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JAMIESON WELLNESS (JWEL – TSX): Accelerating Global Growth

JWEL is Canada’s number one brand in vitamin and minerals supplements (VMS) with 25 per cent market share. This business does 25 per cent EBITDA margins and generates tons of cash that is funding an aggressive international expansion: in the U.S. with the acquisition of Youth Theory and in China in partnership with one of China’s largest Private Equity firms. Jamieson is guiding for strong growth this year driven by double digit growth in Canada and the U.S., and 80 per cent growth in China. Guidance is around $750 million in sales, $140 million in EBITDA, and $1.60 in earning per share (EPS). The stock used to be very expensive, but the valuation has come down significantly to under 11 times forward EBITDA and 17 times forward earnings, providing a great entry point in this unique high-quality growth company. Publicly listed comparable VMS companies trade at much higher multiples, and takeovers in the VMS industry have taken place at over 20 times EBITDA which would value Jamieson at over $60 per share. We think that within a few years, a large global player will be interested in acquiring Jamieson.