It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et. al. found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Jamieson Wellness (TSE:JWEL). While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
View our latest analysis for Jamieson Wellness
How Fast Is Jamieson Wellness Growing Its Earnings Per Share?
In the last three years Jamieson Wellness’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Jamieson Wellness boosted its trailing twelve month EPS from CA$0.72 to CA$0.89, in the last year. That’s a 23% gain; respectable growth in the broader scheme of things.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). While we note Jamieson Wellness’s EBIT margins were flat over the last year, revenue grew by a solid 9.6% to CA$357m. That’s a real positive.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
TSX:JWEL Income Statement June 22nd 2020
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Jamieson Wellness’s forecast profits?
Are Jamieson Wellness Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.
Despite -CA$1.1m worth of sales, Jamieson Wellness insiders have overwhelmingly been buying the stock, spending CA$1.4m on purchases in the last twelve months. On balance, to me, this signals their optimism. It is also worth noting that it was Independent Chairman of the Board David Williams who made the biggest single purchase, worth CA$1.2m, paying CA$24.70 per share.
On top of the insider buying, it’s good to see that Jamieson Wellness insiders have a valuable investment in the business. To be specific, they have CA$32m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that’s only about 2.4% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is Jamieson Wellness Worth Keeping An Eye On?
As I already mentioned, Jamieson Wellness is a growing business, which is what I like to see. Better yet, insiders are significant shareholders, and have been buying more shares. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Before you take the next step you should know about the 4 warning signs for Jamieson Wellness (1 is potentially serious!) that we have uncovered.
The good news is that Jamieson Wellness is not the only growth stock with insider buying. Here’s a list of them… with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.