Gildan Activewear (GIL), mcap=$5.7bn, price $31.19 vs $28.76

$GIL pitch:
– Dominant supplier of blank t-shirts which are sold to wholesale distributors.
– Unwarranted stock price decline over the last 6 months as GILs EBITDA & EPS forecasts are up meaningfully during this period.
– Trades at almost all-time low 8x fwd PE.
– Inventory levels at the distributor level are still below pre-covid levels, and it’ll take until 2023 to get fully restocked.
– Over 80% market share.
– Unassailable cost advantage via manufacturing scale and vertical integration.
– Margins have been structurally improved from 15% to 20%.
– A streamlined cost base will help drive accelerated top-line growth.
– Defensive long-term compounder run by great management.

Valuation:
– Trades at almost all-time low fwd PE of 8x, vs 4x average over the last decade.
– 2024 EPS is forecasted at $4/share, assuming $4bn in revs and 20% EBIT margin.
– At 12x PE that’s at $48 stock.

Exp. gain: +70% to $48/share by 2024.

Full $GIL write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/GILDAN_ACTIVEWEAR_INC/6860980443

Published on: September 19, 2022  •  Published by:
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