Investors in Canada have an opportunity to own a piece of one of the most iconic Canadian brands. When it comes to investing in Canadian stocks, there are certain ‘red flags’ to watch out for, including the tendency for stock prices to rise quickly and unexpectedly. One of the most volatile Canadian stocks is Bauer Hockey, which often receives heavy exposure on financial news channels. Let’s examine whether or not we should buy, sell, or simply avoid this Canadian stock at all costs.
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Bauer Hockey’s Performance In The Stock Market
Bauer Hockey is a publicly traded company on the Canadian Securities Exchange, as well as the New York Stock Exchange. The company primarily manufactures and markets ice skates and hockey equipment worldwide. They also own and operate a number of ice rinks around the world, including nine rinks in Canada and one in the United States. The company’s market capitalization is currently around $700 million, and it’s one of the largest companies in its sector.
Bauer Hockey’s share price rose by almost 80% in the 2017 fiscal year, outperforming the S&P 500 and the Canadian market as a whole. The stock reached its highest price ever in mid-November 2017, and it continues to rise as of this writing. The next significant rise in the stock price is expected to take place in the first quarter of the upcoming fiscal year (which begins on April 1).
Why Are Investors Flocking To Bauer Hockey?
Bauer Hockey is one of the largest and most influential companies in its sector. It’s been around for almost 90 years and is now worth $700 million, making it a fairly attractive investment. The following reasons are key in making a case for investing in Bauer Hockey:
- Solid Industry Performance – The ice skating and hockey equipment industry has historically outperformed the S&P 500 and most other traditional stock markets.
- Attractive Valuation – Bauer Hockey’s market capitalization is currently only 7% above its estimated tangible net worth, which is a very low ratio compared to other Canadian stocks.
- Outstanding Growth Opportunity – The company is expected to post solid growth in both the near and long term.
This low valuation and growth potential make Bauer Hockey a stock that investors must consider buying into, or at least monitoring.
Is Bauer Hockey A Good Buy?
The value of a company is often determined by the market capitalization of its stock, as well as by a variety of other factors. One of the most important is its ‘intrinsic value’. Essentially, this is the current market value of a company’s assets minus its liabilities. When it comes to determining whether or not to buy a given stock, one must look at both the ‘intrinsic value’ and the market price.
Based on its most recent annual results, Bauer Hockey has an ‘intrinsic value’ of $438.3 million, with $352.3 million in cash, $52.3 million in marketable securities and $34.9 million in accounts payable and accrued liabilities. This makes it a highly attractive investment, even at its current valuation.
As mentioned above, the market price for Bauer Hockey has more than doubled in the past year. The stock currently has a price to earnings ratio of 22.2 and a price to sales ratio of 42.7. The low price to earnings and sales ratios suggest that there is still a lot of value left in Bauer Hockey, even at these lofty stock prices.
Key Takeaways
Bauer Hockey is one of the largest and most influential companies in its sector. It’s been around for almost 90 years and is now worth $700 million, making it a fairly attractive investment. The following reasons are key in making a case for investing in Bauer Hockey:
- Solid Industry Performance – The ice skating and hockey equipment industry has historically outperformed the S&P 500 and most other traditional stock markets.
- Attractive Valuation – Bauer Hockey’s market capitalization is currently only 7% above its estimated tangible net worth, which is a very low ratio compared to other Canadian stocks.
- Outstanding Growth Opportunity – The company is expected to post solid growth in both the near and long term.
This low valuation and growth potential make Bauer Hockey a stock that investors must consider buying into, or at least monitoring.