If you’ll permit me to deviate just a little off topic this week, there’s something on my mind. It’s that rare place where extreme sports meets investing. Two companies in particular are well-positioned to take advantage of, what CNBC calls ‘Extreme Sports: The New High‘. But one of them is public, and may be of interest if you want to make cash off the Selfie Generation.
I want to talk about GoPro stock, and if you – as a Canadian – should plop down a little cash for this intriguing company that dominates the action camera market – yet one that’s taken a drubbing since its IPO not 14 months ago…
Why GoPro Stock May Be of Interest
In a word: diversification. Research suggests that Canadians park the vast majority of their cash in Canadian stocks despite the fact our nation makes up less than 3% of the global economy. Most of that falls in 3 broad categories – financials, energy and commodities. So if you’re like many Canuck investors you may want to broaden your reach.
Now, I need to be very clear with this: I am not a financial advisor. I’ve dabbled in the stock market and done reasonably well with the Canadian Couch Potato method championed by Dan Bortolotti. He’s more authoritative on investing for Canadians than me, there’s no question.
And you need to weigh the pros and cons of GoPro stock among many considerations – like your risk tolerance, financial goals, time frame, and equity/fixed income balance. That’s for you to decide, ideally with a fee-only advisor.
Still, as someone who’s ridden both the worst stock market crash and one of the longest bull markets in history, I’ve done fairly well in the equity markets. These are my opinions; as an investor, extreme sports blogger, and most importantly, as a passionate Canadian.
7 Things I Like About GoPro
I’m interested in GoPro stock for several reasons, not the least of which being where it can go from here. As of this writing, GoPro stock is at $30.44 US dollars per share. Yes, I know the Canadian dollar floats at an unfavourable $0.75 on the Yankee buck at present, but that may be a good thing. Having stocks in US dollars help you hedge where it might go.
Consider these 7 things that have been said about GoPro stock by folks in the know – and why it’s currently percolating on the list of stocks that I like…
#1 GoPro Dominates
GoPro has brand power. Even against giants like Apple, Garmin, Nikon and Sony, nothing gives extreme athletes a bigger erection than the thought of killing it on YouTube with a little GoPro love. GoPro gets respect among action cameras.
#2 They Make Money
Despite the much-hyped 40% decline in stock price over the past month, GoPro is profitable. The company brought in almost $420 million in revenue during the second quarter of this year, and grossed a respectable $35 million in profit.
#3 They’re Expanding Their Price Points
GoPro’s Hero is the company’s big money maker, retailing at $499, with much of that coming during the mad holiday shopping season. But GoPro has launched a new camera – the Hero+LCD – at $299. While it’s not the most cutting edge from the GoPro stable, it’s a good starting point for clients who don’t like that $500 threshold.
#4 GoPro Streams Killer Content
GoPro stock took a noticeable jump this February when the company announced a new Roku Channel. The company is getting into content creation – a logical stepping stone for GoPro – and it’s not a huge leap from there to consider they may soon develop a loyal subscriber base.
#5 GoPro is Exciting
People love pretty shiny stuff and they get that with GoPro. I’m guilty as charged here, having blogged on many an occasion about epic BASE jumps that defy logic and often intelligence, but they sure look neat. People take notice too; GoPro videos routinely go viral, and have eyes, minds and the wallets that go with them.
#6 GoPro is About YOU
This is a generation of FitBits and selfie-sticks. Depending on your outlook, it’s a sad or exciting day when you can strap a GoPro on your helmet and document your bike ride to WalMart. Hey, we’re all directors, right? GoPro stock does well with short attention spans.
#7 GoPro is CHEAP! (At the Moment)
Without getting heavy in investing theory, the price to earnings ration is a good measure of a company’s value. Generally speaking, over 23 means the stock is over-valued, and under ten suggests there are internal problems. GoPro’s forecasted price to earnings ratio is 17.46. That’s bang-on exactly where you want it to be.
Heck, I think I just talked myself into buying GoPro – in which case, disregard this post so you don’t drive the price up!
Keep it in an RRSP or Unregistered Account
Being an American security, you’re going to pay a 15% foreign income tax to the IRS. The good news is you get that back if it’s held in an RRSP or non-register account. For the latter option, American dividend stocks are taxed quite favourably here in Canada, so it’s fine there if you’ve exhausted your RRSP cap room.
Review Dan Bortolotti’s excellent article on where to keep holdings for greatest tax efficiency here in the great white north.
So to summarize, I am NOT a financial advisor. You need to weigh the pros and cons of GoPro stock if you want to leap in. But there’s value here – spoken both as an extreme sports blogger and Canadian investor. Watch GoPro stock and consider it as way to diversify your American holdings in a company that’s going places.
Disclaimer: This blog post is written for entertainment purposes only and should not be taken as advice to buy or sell GoPro stock.