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A stock mentioned here a few times, Bread Financial Holdings BFH, currently at $39.40
Mainly a private label credit card issuer and loyalty program firm, though you wouldn't be able to tell that from the word salad they use as a corporate profile.

They keep making a money. Admittedly less than before, partly because of a stillborn spinoff.
But even with profits the price just kept tanking and tanking, so my old fashioned notions that it might actually be worth something did my portfolio no good at all : )

The reason I mention them:
It seems possible that their out-of-fashion cycle ended with some sort of capitulation around May 4.
The cutlery has bounced.

Since then:
RSP (average S&P 500 company) up 9.7%
SPY up 12.1%
BFH up 67.6%

The estimates of 2023 earnings are running around $9.50 to $11.80, so the P/E is all the way up to the range 3.3 to 4.1
Next year is anticipated to be flattish to a hair down, so it isn't a short term earnings growth story--their business is cyclical.

Still, if you want something still way out of fashion, dirt cheap, but on a momentum tear, this is your baby!
But beware advice from someone who needs the price to rise something like another 75% from here before breaking even on this one : )

Jim

But beware advice from someone who needs the price to rise something like another 75% from here before breaking even on this one : )


I haven't heard a 'pump-n-dump in a bit! 🤣

Joe

Value and momentum are the two best established "factors". The sweetest spot when both are at play - a badly beaten down stock rebounding strongly. Some (perhaps many) of those will end up being duds but the winners can go wild, making up for the losses. I think the key is to get out if it loses momentum, unless you're pretty confident in the value story and don't mind holding for the long haul.

Thanks for sharing, Jim.

I noticed the rise in share price yesterday after earnings too.
Moreover, since my question about BFH to you back in June the price is up almost 25% - so much for my concern about being a value trap!

a badly beaten down stock rebounding strongly

Have a look at TUP then.

Momentum: Very clearly.
Value: Mhm.

I bought it. Can't resist very cheap stocks.

I bought it. Can't resist very cheap stocks.

I hope that was BFH, not TUP : )

If BFH ever starts showing positive year-on-year revenue and profit trends, their multiple could conceivably expand a bit.
Even 8 or 9 would make for a good return.
For whatever it's worth, Value Line's estimate for stock price 3-5 years out is $65 to $110.
With dividends, the middle of that range of prices and time frames equates to around 22%/year from today's $40.75, and they are assuming a terminal P/E of only 5.5.

On the other hand, as mentioned, so far my predictions of Mr Market's view on this one have been pretty low in accuracy : )

For somebody wanting to bail when the current rally ends (wrong board for that style!) keep an eye on this chart.
https://stockcharts.com/h-sc/ui?s=BFH%3ARSP&p=D&yr...
The notion for chickens would be to sell when the chart flattens out or starts to turn down. That's when the stock has stopped outperforming the average US large cap.


For another truly, madly, deeply unloved stock that could conceivably have future value, have a look at Newell Brands (NWL).
(home of Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer's, Coleman, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid...)
They have also bounced off the floor, rebounding and rising quite a bit faster than other stocks since about a month ago.
Current price about $11, up from about $8. Value Line's 3-5 year target is $30-$55, so at least somebody sees them as a potential winner.
Comps are horrible lately partly because they had a Covid bump but mainly because they haven't been doing very well lately.
Ironically, the trigger for the rebound may have been taking an axe to the dividend in May.
This is just an idea for the reading list, not an investment recommendation. I have played them in the past, in my put-writing portfolio, and made money.
The shares are perhaps best thought of as lottery tickets or call options that don't expire: The odds may or may not be good, but it could be a small downside combined with a high upside.

Jim

Jim:

I've scratched my head for probably five years, waiting for someone with more penetration than I to discuss Newell. Their product line is near-unassailable with brand recognition, ongoing need for repeat purchases, largely industrial/commercial clientele, and a near-limitless supply of raw materials (at least until climate change forces our hand to leave the bloody hydrocarbons in the ground for crissake).

I haven't teased out anything intrinsically wrong with their financials, and aside from some nonspecific background muttering about past and present dysfunctional management I've been at a loss to explain what might charitably be described as underperformance for at least the last, uh 25 quarters or so.

Beside the Warren/Charlie dictum about having a business that "any idiot can run b/c sooner or later some idiot will" - any thoughts as to the 'why'?

--sutton

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