Three more companies that might benefit from a housing recovery; Greetings (again) from Kenya
1) Last week, I wrote about three struggling companies with beaten-down stocks – down 83% to 92% from their peaks – that might benefit from a recovery I see underway in the housing market: Helen of Troy (HELE), Sleep Number (SNBR), and Lovesac (LOVE).
Today, I'd like to briefly review three more companies that might also benefit, but whose stocks have held up better...
The top performer among the three is household appliance maker SharkNinja (SN). The company has been on a roll since its IPO in July 2023 thanks to its innovative products and clever marketing.
Its stock is at an all-time high, as you can see in this chart:
Not surprisingly, revenue and net income have soared:
The rest of the financial picture looks similarly good: healthy free cash flow, a decent balance sheet, etc.
Here's a pitch for the stock from last May posted on my favorite stock idea website, Value Investors Club ("VIC"), which argues:
SharkNinja stands out in the stagnant small-appliance market as an innovation-led share-gainer. We believe its unique business model delivers high-quality products to the market faster than competitors at competitive prices, enabled by a low-cost supply chain and robust reinvestment in [research and development] and sales & marketing.
The Company is experiencing rapid growth in international markets with substantial potential (we estimate 5+ years of 30%+ growth), and it continues to fuel share gains & hit new product categories in the domestic market. We believe the Market underestimates both factors and has focused on near-term tariff issues that are now abating. On 18x our 2027 [earnings per share] estimate we see ~70% upside.
So, why am I not pursuing this idea further? In a word, valuation...
The stock has run up nearly 40% since that pitch on VIC to Friday's closing price of $127.06, giving the company a $17.9 billion market cap.
Analysts expect that the company earned $5.15 per share last year and will earn $5.96 this year. That means the stock is trading at 24.7 times trailing earnings and 21.3 times forward earnings.
Those are reasonable multiples, so I would say the stock is fairly valued. And I'm not interested in buying or recommending fairly valued stocks.
But SharkNinja is a good one to add to my "bench." This is a volatile stock – it traded as low as $60.50 just last April during the tariff sell-off – so it might become a buy someday.
As such, my Stansberry's Investment Advisory team and I at Stansberry Research will be keeping an eye on it. If we decide to recommend it, as always, subscribers will be the first to know.
If you're not already an Investment Advisory subscriber, you can become one by clicking here.
2) Many years ago, I briefly owned the stock of 140-year-old, Atlanta-based Haverty Furniture (HVT).
So I was especially interested to see the Q&A with its CEO, Steven Burdette, at the ICR Conference. He has been with the company for 42 years and is "straight out of central casting," with his Southern accent and old-school approach to running the business.
Haverty is a decent business, but it's trapped in a terrible industry characterized by cut-throat competition from all over the world.
As a result, the stock is mostly flat, save for a short-lived spike in 2021:
As you might expect (since most stocks follow earnings over time), revenues and profits have been flat as well:
The company generates steady free cash flow, which it uses to pay a healthy 5% dividend. But that's not enough of a reason to own the stock.
At Friday's closing price of $26.32, the stock is trading at 12.6 times this year's earnings estimates. That strikes me as about right for a decent-quality, low-to-no-growth business.
3) Lastly, let's take a look at appliance maker Hamilton Beach Brands (HBB), which has been around since 1910.
In addition to its namesake brand, it also owns Proctor Silex appliances and Brita water filters. Like Haverty, it's a decent company in a terrible sector, with near-infinite competition from countless Asian companies (I saw dozens of them at the Consumer Electronics Show recently).
In 2017, it was spun off from NACCO Industries (NC), a coal and aggregates mining company (don't ask me why it owned Hamilton Beach). Since then, the stock has been a dud, mostly trading between $10 and $30, closing Friday at $19.02:
The company's financial performance has been a dud as well, as revenue and operating income have been flat to slightly down over the past decade:
Hamilton Beach pays a 2.5% dividend. And the stock trades at a mere 8.1 times trailing earnings, which is a very low multiple – but it's well deserved. It's hard to see any reason to own this business.
In summary, I kissed three more frogs but didn't find any princes. And that's okay...
Whenever I write about stocks that end up not being interesting – at least at current prices – a few readers invariably e-mail me and say, "Whitney, why did you waste my time? Just tell me about the stocks you're really excited about!"
But that's not how investing works. Finding misunderstood and, hence, undervalued stocks in the market – especially when the market is near all-time highs like it is today – is like finding a needle in a haystack.
Most of the time, you need to look at 100 companies to find one to buy. Plus, of the 99 you look at and reject at current prices, it's certain that one or more of them will become interesting in the future at a lower price.
So bear with me, dear readers, as we kiss lots of frogs and sift through lots of haystacks!
4) Greetings from Nairobi, Kenya, where I'm visiting my parents...
"But wait a second, Whitney," you might be saying, "Didn't you just spend almost a month with them in Kenya and South Africa?"
Well, yes. But eight days after I took the 14-hour nonstop flight from Nairobi to JFK International Airport, I was on the same flight back, as crazy as that may sound...
Allow me to explain: On Friday morning, as I was jogging around the reservoir in Central Park, I got a call from my parents that my dad was feeling very weak. He couldn't even stand up from the couch and he sounded terrible, so my mom was planning to take him to the hospital.
I looked at my calendar and saw that I had no pressing commitments for the next six days. I had just enough time to run home, shower, pack, and get to JFK to catch the daily nonstop to Nairobi departing at 1:45 p.m.
It was a long flight stuck in the dreaded middle seat, but I'm really glad I came. My parents have really appreciated the emotional and practical support – dealing with lots of tests and doctors (who are excellent), driving an hour each way between the hospital and their home, etc.
Plus, I took them shopping to buy a new OLED Samsung TV, which is being delivered and installed today (my dad loves electronic gadgets as much as I do). Here are some photos:
A five-day trip halfway across the world is expensive and exhausting, but here's how I think about it...
Though I was too young and foolish to understand it at the time, I certainly now appreciate how much my parents sacrificed to give me and my sister the best childhood and young adulthood any kids ever had. So it's the least we can do to help them have the happiest (hopefully many!) final years as possible.
As for how my dad is doing, it's mixed. He's feeling better – he can walk around, go out to lunch, and go shopping. But he's still very weak, so the doctors are keeping him in the hospital until they figure out what's wrong with him.
They've done a battery of tests and have ruled out the obvious problems. His heart is beating regularly, so it's not another flare-up of his A-fib... He has a bit of a cough, but his lungs are clear, so it's not pneumonia... And all the tests for COVID and other viruses are negative.
So what could it be? I'm guessing he caught the "super flu" that's spreading all over the world (here's an article about it), which hits older folks particularly hard (he turns 84 in two weeks), but the doctors can't confirm it.
Hopefully they'll figure it out soon so we can bring him home before I fly back to the U.S. tomorrow.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.