Jamieson Wellness (JWEL.TO)

Unsolicited takeout offer. Core business doing quite well. He'd buy, despite recent stock appreciation, as odds of a takeout are higher than the market is expecting.

To "pump up" portfolios across Canada. Founded in Windsor ON. Bought a California company a few years ago, so little to no impact from tariffs. Growing in China, where company's attention to quality makes it stand apart. Seeing takeouts of private vitamin/mineral companies at much higher valuations. Has grown dividend over last 5 years at 14% clip. Yield is 2.55%.

Bottomed back in 2023. Since then a defined uptrend, with higher highs and higher lows. Chart looks good, stock remains in a trading range. Next upside target is ~$40.50.

Good business, decent ROIC. Multiple's not inexpensive. Lots of retailers are available under 13x with great ROIC. He continues to meet with management.

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. 
Unlock Premium - Try 5i Free

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%.

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.

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.
Unlock Premium - Try 5i Free

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.

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%.

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.

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.