Helen of Troy: An Underpriced Stock

View the full NASDAQ:HELE chart at Wikinvest

Helen of Troy Limited (HELE) is set to report earnings before the market opens on Thursday, July 9th (HELE Webcast (click on the event calendar link)) . Helen of Troy is a leading designer, producer and global marketer of brand-name personal care and household consumer products. The Company’s personal care products include hair dryers, curling irons, hair setters, women’s shavers, brushes, combs, hair accessories, home hair clippers, mirrors, foot baths, body massagers, paraffin baths, liquid hair styling products, body powder and skin care products. The company’s household products include consumer product tools in the kitchen, cleaning, barbecue, barware, storage, organization, garden, hardware, trash and automotive categories.

The company is expected to earn 35 cents for its 1st quarter. We expect the Consumer Goods company to announce earnings that will beat investors’ and analysts’ expectations. With HELE it’s simple. When they beat earnings the stock rises and when they miss it gets hit.

HELE is an underpriced stock in our estimation and has plenty of room to move up. It currently trades with a forward P/E of 9.12, while earnings are expected to grow at 13% during the next 5 years. Helen currently trades just a hair over its book value of $17.03 and with a strong PEG Ratio of .77. By most metrics HELE trades at about a 20% discount to its peers.

Our technical analysis of HELE’s stock chart reveals our favorite buy signal setup, a positive MACD crossover under the zero line. With a positive earnings announcement and a little nudge from management’s guidance, we see no reason why HELE’s stock can’t be $20.

And $20 seems to be the speculators' target price. While there is very little action in the HELE call options or put options, the July 20 call options traded 190 contracts Monday. That’s more than all the July put option trades combined. The bets are on an upside surprise.

Suggested Closing Price Stop: $15.57

Comments

[MyReference...:]

For HELE what are the numbers for:
1) Total Debt/Tangible Assets?
2) Quick Ratio?

Larger retailers haven't been able to pay their bills lately.

Jul 10 03:53 PM

[johngonole:]

The author may be right. Probably right. But the lack of info provided means I've got to do hours of research before I can make an informed decision. This is how it is with almost all stock picking articles. Even the motley fool subscriber newsletters (which I no longer purchase) are basically poorly documented sales pitches.

Jul 11 02:06 AM

[The Corret ...:]

Johngonole - tell me what more you would like to see? We spend about 2-3 hours researching for specific criteria on companies that are earnings surprise candidates and have the potential to POP or DROP on the announcement. These Trading Earnings picks are just that, short-term trades.

If there is more info you would like to see, I am sure you are not alone - fill me in and we will try to make the adjustments.


On Jul 11 02:06 AM johngonole wrote:

> The author may be right. Probably right. But the lack of info provided
> means I've got to do hours of research before I can make an informed
> decision. This is how it is with almost all stock picking articles.
> Even the motley fool subscriber newsletters (which I no longer purchase)
> are basically poorly documented sales pitches.

Jul 14 02:59 PM