Bruce Campbell (2) Jamieson Wellness JWEL-T BUY Sep 27, 2022

Sold off, as investors assumed a pandemic bump. Sales continue to grow organically. Continues to gain market share. US acquisition lets them accelerate growth. Expanding dramatically in China. 19x earnings. Very high quality company.

He sold it after a recent disappointing earnings report (lowered their guidance a lot). After all, they're not in a cyclical business. Their acquisition of a Chinese company was interesting, though the structure was unusual--they bought $100 million in preferred shares with warrants but no dividend and took a minority share in the Chinese business. That was the right move in the Chinese market. Otherwise, JWEL's fundamentals didn't impress him. The stock isn't getting much love these days.

Canada's #1 brand in its sector, has 25% market share. Went public 6-7 years ago, and increased sales and profits every year. US acquisition should accelerate growth. Now controls direct distribution in China. Cheaper than ever at 18x earnings, but growth prospects are better than ever. High margin, high quality, steady. Great entry point. Yield is 2.32%.

That's right. They've been severely beaten up over the last few years. Massive outflow of funds out of Canada, and it hits the smaller stocks even more. A lot of retail investors put in fund redemptions last year, so that created many bargains.

Over the last 6 months, he added to many of his small- and mid-cap positions. Companies like QTRH, JWEL, and EQB.

EPS of 9c beat estimates of 6c; revenue of $128M beat estimates of $123.1M. EBITDA of $16M matched estimates. Year forecast was maintained. A couple of brokers lowered targets. Revenue fell 6.4% with a large decline in Strategic Partners business with the closing of a contract. Gross margins declined. While this was a 'beat' versus expectations, debt remains too high for our comfortable level, considering the fairly big decline in growth vs prior year. We think buyers can wait.
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He owns it and likes it even though the price movement has been disappointing. It is consolidating here. Analysts have a $38 to$42 price target.

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%.

There has been no signficant recent company news, good or bad. It recently did get some upgrades, with TD noting 'strong contributions from the Chinese market, and no negative operational news'. The decline could be general small cap aversion or tariff fears, as we cannot point to anything specific here. The last quarter was mixed, but estimates have slowly ticked up over the last month. We would consider it OK, with high debt the main drawback for us. 
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Good business, decent ROIC. Multiple's not inexpensive. Lots of retailers are available under 13x with great ROIC. He continues to meet with management.