Evidence of a thawing housing market; Update on Helen of Troy; More pictures from Cape Town
1) I came across two articles that make me think the frozen U.S. housing market may be starting to thaw...
The first, from the Washington Post, notes that more Americans now have mortgage rates higher than 6% – and highlights why that's actually a good thing for the housing market:
It matters because those ultralow, pandemic-era rates – while great for the homeowners who nabbed them – have been something of a problem for the housing market ever since.
People are loath to sell their homes when it means giving up a cheap loan for a significantly more expensive one. Mortgage rates have more than doubled since 2021, when a 30-year loan could be had for less than 3 percent, Federal Reserve data show, and they have remained above 6 percent for more than three years.
Homeowners with low rates stayed put, and the ensuing drop in home listings gave rise to an inventory crunch and surging property prices – a dynamic known as the "mortgage lock-in effect."
As you can see in this chart, the number of homeowners with mortgages below 5%, 4%, and 3% is declining sharply:
As a result:
"The direction going forward will be higher average interest rates for homeowners, and that's actually a good thing, because it's going to reduce the lock-in effect," said Nick Gerli, chief executive of the real estate app Reventure, who pointed out the mortgage rate crossover on the social media site X. "We are going to see potentially a lot more inventory in the future, as that lock-in effect just continues to weaken."
The second article, from the Wall Street Journal, shows that the housing market is indeed showing signs of life through increased home sales:
Home sales finished 2025 with surprisingly strong momentum, rising 5.1% in December for the biggest gain in nearly two years. But even with last month's boost, the year as a whole still ranks as one of the worst sales slumps in decades.
The increase in sales, which was more than double what economists surveyed by The Wall Street Journal had expected, reflected easing mortgage rates and slower growth in home prices.
On a monthly basis, the existing-home sales gain was the biggest since February 2024 and the fourth-straight monthly increase, the National Association of Realtors said Wednesday. The four consecutive months of rising sales is the longest streak since 2020.
The December sales rate was the highest since February 2023.
This is great news for home buyers and sellers, for many housing-related companies and their stocks, and for the economy as a whole.
I had this in mind as I attended company presentations at the ICR Conference in Orlando, Florida on Monday and Tuesday. And I saw five companies that could benefit from an improvement in the housing market.
So let's take a look at the first one today...
2) Helen of Troy (HELE) owns numerous well-known brands such as Oxo kitchen products, Hydro Flask water bottles, Pur water filters, Revlon hair dryers, Osprey backpacks, and many more.
Here's an abbreviated list of products it makes for the home: food-storage containers, kitchen utensils, bath and cleaning products, drinkware, mugs, water-filtration and humidification systems, air purifiers, heaters, and fans.
Its stock has collapsed by more than 92% since its high in late 2021. And at yesterday's close of $19.05, it's within a smidge of a 17-year low, as you can see in this chart:
I first wrote about the company in my January 11, 2023 e-mail, when the stock was at $111.50, after seeing management present at the ICR Conference three years ago. I concluded:
I'm going to do more work on the company because it appears to be a high-quality, well-managed, shareholder-friendly business whose stock has taken a beating due to what may be short-term factors (this is where I'll focus my research).
Fortunately, my additional research led me to avoid the stock. Revenue and profits had started to decline, and I didn't like the "roll up" business model, characterized by lots of acquisitions funded by rising debt.
A year later, with the stock at roughly the same level, I saw the company present again at the ICR Conference. I wrote about it in my January 5, 2024 e-mail, in which I shared a pitch to short the company posted on ValueInvestorsClub and concluded, "I'm still not tempted."
I last updated my readers on Helen of Troy in my May 15, 2025 e-mail, when the stock had crashed to $29.76. I shared this short pitch from January 2023 by famed activist short seller Marc Cohodes and retail analyst Brian McGough. They argued:
HELE is not in the game of running brands successfully, its game is to use a zero interest rate environment, lever up, buy mediocre brands with no synergies, and use creative accounting to manufacture non-cash, non-GAAP [earnings per share] that the Street takes hook, line and sinker. With a levered balance sheet, permanently higher interest rates, and floating rate debt, the game it plays is OVER. Now it comes down to running its mediocre portfolio profitably, which we think this team is unable to execute upon. It needs to dramatically change its business model, divest arguably half its portfolio, de-lever, stem share loss, and drive profitable growth. This management team is one of the worst stewards of capital we've seen in Consumer. It's like the second coming of Hanesbrands circa 5-years ago, or Newell 10-years ago, or Jones Apparel group 15-years ago.
So, the short sellers were right when the stock was around $100 and $30 – it's a good example of why smart investors should always listen to (though not necessarily follow) short sellers.
But today, at less than $20, might it be worth bottom-fishing this bombed-out stock?
To determine this, let's take a look at the financials. As always, we'll start with the long-term revenue and profit trends:
The trend over the past five years has been awful... but nowhere near as bad as the stock.
The company's free cash flow ("FCF") has also fallen, but it remains positive – and has never once been negative in the past two decades:
Helen of Troy's debt rose in 2021 due to its $415 million acquisition of Osprey Packs, but it has been relatively stable since then. It's higher than I'd like to see, but it's manageable – and it reduces the chances that management will try to do another acquisition.
Since the Osprey acquisition, the company has made two other acquisitions totaling around $380 million and (unwisely) bought back $178 million of stock. Otherwise, management has been focused on trying to turn around the business.
In summary, Helen of Troy's financial picture is weak but far from catastrophic. It has decent brands, positive earnings and cash flow, and a manageable amount of debt. So this company isn't going away, in my opinion.
And the stock sell-off seems overdone. Revenue is down 19% from its peak, and operating income has been cut in half (but is still strongly positive), whereas the stock is down 92%. That's the kind of disconnect I like to see...
Today, the company's market capitalization is down to a mere $443 million. Adding $917 million of net debt, it has an enterprise value of $1.36 billion.
It generated $56 million of FCF in the 12 months ending November 30. The five analysts who follow the company expect it to earn $3.47 per share for the fiscal year ending February 28, 2026 and $3.38 per share next fiscal year. That means the stock is trading for a super-low 5.6 times next fiscal year's estimates.
Helen of Troy's stock is very interesting here, so my team and I will be taking a closer look. If we decide to recommend it, Stansberry's Investment Advisory subscribers will, as always, be the first to know.
If you aren't already a subscriber, you can become one by clicking here.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.
P.P.S. Continuing my series on my recent trip to South Africa with my parents...
We spent three days in Cape Town, a truly spectacular city. We took the cable car and spent two hours at the top of Table Mountain, where we saw one of the most beautiful sunsets ever.
The next day, we saw penguins at Boulders Beach and the magnificent Kirstenbosch National Botanical Garden. And on the last morning, my dad and I hiked up Lion's Head.
