Resilient Business Model backed up by higher Product-acceptability: Jamieson Wellness Inc. (TSX: JWEL) is engaged in manufacturing, distributing, and marketing of branded natural health products including vitamins, minerals, and supplements. Investors should note that the stock has outperformed the market and appreciated nearly ~24% during the last one months and is currently trading above its 200-Days Simple Moving Average (SMA) amidst sharp fall in the major indices. The business is resilient and caters to the consumer health segment, while we believe the business model is recession-free.

The company paid a quarterly dividend of CAD 0.11 per share. Meanwhile, during FY19, the company paid a dividend of CAD 14.68 million, as compared to CAD 12.93 million in FY18.

Q1FY20 Highlights: JWEL released its first quarterly highlights, wherein the company’s revenue is expected within the range of CAD 83 million to CAD 84.5 million, significantly higher than CAD 72.6 million in the previous corresponding period. The quarter was marked by a solid growth in the branded products within the domestic market driven by higher product acceptability and positive impacts from the consumer and trade programs. Higher demand for general health supplement further act as a booster to the domestic branded revenue. Furthermore, the company witnessed a significant rise in demand from international markets, followed by decent growth from strategic collaborations. The company further notified of higher in order to maintain adequate supply and will reduce its total output levels. The above factors might hinder the margin for the coming months.

During FY19, the company’s net income stood at CAD 31.657 million as compared to CAD 26,673 million in FY18. At the end of FY19, the company exited the year with total assets of CAD 561.78 million, higher than CAD 549.02 million in FY18.

FY19 Financial Highlights (Source: Company Reports)

Stock Recommendation: The stock of JWEL has generated a solid return of ~46% and ~68% during the last nine months and one year, respectively and currently the stock is quoting at the upper band of its 52-week trading range of CAD 30.80 and CAD 17.38. Despite a stunning appreciation in the stock price, the stock offering a dividend yield of 1.5%. The company has secured supplementary sources of raw materials in order to provide a consistent supply. The company has generated higher ROE of 12.70%, as compared to 11.6% in FY18, indicating a solid profitability growth. Despite an economic slowdown, the company has shown tremendous growth backed by an increase in product acceptability and higher orders from e-commerce segments. Although the group is bullish on its prospect, it is taking certain measures to maintain the supply levels, which is likely to put pressure on margins. Considering the aforesaid facts, we recommend a ‘Hold’ rating on the stock at the closing market price of CAD 29.97, as on April 17, 2020.

JWEL Daily Price Chart (Source: Thomson Reuters)

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