Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

The 1 Stock NO ONE Talks About

Published 2019-09-13, 08:00 a/m
Updated 2019-09-13, 08:05 a/m
© Reuters.

© Reuters.

I’m going to let you in on a little secret: Jamieson (TSX:JWEL).

Although this company looks like it dropped the ball, I can assure you that it has done anything but. Sure the company has reported a net loss in the past four of five years, and its total expenses have increased each year, but there is much more to the company than meets the eye.

Firstly, the company is in the business of selling vitamins in a country where baby boomers are one of the largest generational cohorts. Secondly, the company’s net income from operations has increased every year since fiscal 2014.

Aging population Simply put, North Americans are getting older.

Statistics Canada estimated that as of July 1, 2018, there were 6.4 million Canadians over the age of 65, which represents 17% of Canada’s population. In the United States, July 1, 2018, estimates by the U.S. Census Bureau indicates that 16% of the population is over 65 years old.

What this means is that the demand for vitamins will increase, as evidenced by Jamieson’s revenues, which grew from $193 million in fiscal 2014 to $320 million in fiscal 2018.

Given that Jamieson was founded in 1922, the company has a long history, which gives it credibility in the eyes of consumers. I can attest to this, as the vitamins that I purchase have strictly been Jamieson. What Jamieson has achieved in the vitamin industry is comparable to what Kleenex achieved in the tissue industry — the name is synonymous with the product.

The company has also survived multiple recessions, which means that the management is top notch.

Growing operating income Operating income is equally as important as net income, if not more so.

The reason being that operating income reports income derived strictly from operations. It essentially gives investors a snap shot of how well the company’s main line of business is doing while excluding one-time transactions that occur on a yearly basis.

One example of this would be the purchase or sale of a subsidiary. On the income statement this would usually be classified as “income from extraordinary items.” This is included in the net income, which means that if a company sold a division of its business for $50 million and the company reported a net loss of $20 million before accounting for this, the company’s total net income would be $30 million.

Jamieson’s operating income increased from $11 million in fiscal 2014 to $49 million in fiscal 2018, which represents a compounded annual growth rate of 34.82% which is amazing.

Bottom line By no means is Jamieson a sexy stock, but it has demonstrated it can deliver superior returns to investors through an aging North American population and growing operating income.

The aging population helps Jamieson, as it drives sales of vitamins and supplements, which leads to a growing net income.

The company has increased operating income in each of the past five years resulting in a growth from $11 million in fiscal 2014 to $49 million in fiscal 2018. This indicates the company does a good job in deriving income from its main line of business.

The Foolish takeaway is that Jamieson is definitely worth your attention.

If you liked this article, click the link below for exclusive insight.

Fool contributor Chen Liu has no position in any of the stocks mentioned.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.