After gaining more than 50% since its March IPO, Canada Goose Holdings (NYSE:GOOS) has the enviable distinction of being a richly valued stock. In this second of two segments analyzing the Canadian outerwear retailer, our podcast team discusses the team's valuation, and why investors can probably feel comfortable owning "GOOS" over the long-term despite its bullish run.

A full transcript follows the video.

This video was recorded on Nov. 14, 2017.

Vincent Shen: Final points, then, in terms of this company. If you're considering this stock, I think we should spend a few minutes looking at the valuation. In the apparel industry, the double-digit annual growth that this brand has been able to deliver, I think their three-year CAGR for revenue growth is around 37% for the past three fiscal years. And the U.S. has actually shown the strongest growth for the company with the three-year compound annual growth rate of over 50%. You mentioned your family in Canada and their familiarity with this brand. Brand awareness in the U.S. market is still pretty low for Canada Goose, just 16% compared to 76% in their home country. So, a lot of room to run here. The stock is trading at over $31 per share. That puts the forward price-to-earnings above 70 times according to S&P Capital IQ estimates. So, you're paying a pretty penny for a piece of that growth. Are you sold, Asit, on this business, and paying that premium?

Asit Sharma: I am, actually. If you look at their price-to-sales ratio, it's another way to gauge what a reasonable price for a company is when it's very young. And that's up, their [shares] are priced at 7 times the 12-month trailing sales. So, both of those numbers are a little bit high, but what you're paying for is that growth. Keep in mind, this is still a very tiny company. So it has the potential to earn into both of those metrics. One of the things that I like to look at when I see a company that's flying high that I'm interested in is, how well do they manage their inventory? And why I look at that is, at some point with these rapidly increasing sales, you're going to bump into problems, most likely, with the relationship between your sales and your inventory, have a bad quarter, and then the market will adjust that high-flying P/E ratio down. We've all had that experience.

What I really like about this company is that its manufacturing is quite flexible. They have factories in Canada, and they're not afraid to sell out of items. In fact, in one of the recent calls, the CEO was discussing that: "Look, we do sell out of items, but that's a good thing. We don't want to be overstocked in inventory." Which means they're a little bit more fleet of foot, can supply inventory a little bit more rapidly, and sell into demand. That's one of your protections if you're buying a high-flying retail company which has a high price-to-sales ratio. You don't want it to be the other way, where they've got a lot of inventory, but one slip-up is going to cost them. Nonetheless, there could be some rough quarters in any growth story. Long-term investors, Fools know that if the company has a competitive advantage, it's well-managed, and the demand is there, you can work through those quarters. So, given all of those, I would be an investor. It's not going to be a straight-up path, but I think this company has a lot of potential. I'm very interested in it, and I'm glad we had the opportunity to talk about it today.

Shen: Yeah. I think the value of that brand, the reputation that it developed, not easy to do, very valuable. The flexibility in terms of their manufacturing that they mentioned, and their flexibility and their willingness to maintain that cachet by having items sold out, for example, having lines at stores, that's very valuable. Their inventory levels will probably get a little choppy, maybe rise a little bit. I think they did in the previous quarter. As they expand, for example, with their DTC push, as they open these company-owned stores, they want to be able to make sure that they supply them properly. But the company, I think, has shown a great ability to manage that. Also, their retail partners are very happy, have shown great sell-through rates through the wholesale channels at full price. So, again, the brand being very coveted among fashion-conscious consumers. It's definitely a company that we'll have to speak about again in the coming months, provide an update and see where things stand as they push into this DTC strategy that a lot of other apparel companies, like Nike, for example, are focusing on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.