Helen of Troy: An Underpriced Stock

| About: Helen of (HELE)

Helen of Troy Limited (NASDAQ: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

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