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Why I'm Buying the Dip in Park Lawn
Park Lawn (TSX:PLC) is a Toronto-based company that provides death care products and services in
Canada and the United States. Shares of this TSX stock have plunged 40% in 2022 as of close on
September 21. That has pushed the stock into negative territory in the year-over-year period.
The COVID-19 pandemic spurred a troubling spike in total deaths in North America and around the
world. This, in turn, led to a boom in death care services. Report Linker recently estimated that the
global death care services market was worth $100 billion in 2020. The market researcher projects that
the market will grow to $154 billion by 2027. That would represent a compound annual growth rate
(CAGR) of 6.3% over the forecast period.
In Q2 2022, this company delivered net revenue growth of 5.4% to $75.9 million. Meanwhile, net
revenues jumped 11% to $159 million in the year-to-date period. Its adjusted EBITDA stood at $37.0
million in the first six months of fiscal 2022 – down 1.7% from the same year-to-date period in fiscal
2021.
A normalized death rate compared to 2020 and 2021 has led to a dip in earnings. However, investors
can count on its growth over the long term. Park Lawn currently possesses a very solid price-to-earnings
ratio of 22. It offers a quarterly dividend of $0.114 per share. That represents a modest 1.8% yield.
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