Investors looking for a safe harbour in the current market storm might want to consider small-cap security %Birkenstock (NYSE: $BIRK).
The German sandal maker has been a going concern since 1774. Yet it only went public 18 months ago, listing shares on the New York Stock Exchange in the autumn of 2023.
For investors nervous about U.S. markets entering a correction and technology stocks falling sharply, Birkenstock offers a margin of safety.
First, the company is based outside the U.S. in Germany. Second, the company is about as low-tech as it gets.
Despite being in continuous operation for 250 years, Birkenstock sandals have changed little over the years and still feature their distinctive cork soles.
Plus, most of Birkenstock’s sales come from outside the American market, insulating it from a downturn in the U.S. economy.
The company’s fastest growing market is in Asia, where sales rose 47% year-over-year in the final quarter of last year.
Birkenstock’s earnings since going public have been strong and the company has forecast sales growth of 15% to 17% on a constant currency basis this year.
Birkenstock’s growth has been powered by a focus on building up its direct-to-consumer sales channel alongside its whole distributors.
Management has also made paying down debt a priority, ending 2024 with net leverage of 1.9 times earnings, down from 2.6 times in 2023.
Yet for all its success, Birkenstock has a market capitalization of $8.64 billion U.S., placing it in the small-cap camp.
Analysts remain extremely bullish on BIRK stock. Among 11 Wall Street analysts who cover the stock, 10 rate it a buy while one says it’s a hold.
The average price target on Birkenstock of $69.20 U.S. is 50% higher than where the shares currently trade.
With the stock at $46 U.S. a share and near a 52-week low, now might be an opportune time for investors to try Birkenstock on for size.
