Monday's column explored the plight of Newell Brands Inc. (NWL) , a name that has been on my radar and one I thought might be an interesting tax-loss-selling story that might pop entering 2018. It did not. Indeed, the story got more interesting following Monday's earnings release, which disappointed the market.
Newell has taken it on the chin the past two days, down more than 18%. Dumpster diver that I am, I found this to be an interesting entry point for an initial position; not an all-in full position, mind you, but a start. I already can see the very bright Real Money technical analysis experts shaking their heads.
Bad feelings about the name may persist, and potential damage from tariffs, which I believe is temporary and overblown, may be an overhang. But I am comfortable tiptoeing into this name, which is in transition, as it now is on sale, yielding 4% and trading at about 9x next year's consensus estimates.
Meanwhile, Fossil Group Inc. (FOSL) , a member of my 2018 Double Net Value Portfolio and a driving force in its success, put up some seemingly great second-quarter results yesterday but also warned about the third quarter, so today's market reaction could be all over the map. Fossil earned 17 cents a share, a startling number in light of consensus expectations of a loss of 57 cents a share. Revenue of $576.6 million was ahead of consensus by nearly $15 million; all in all, a great quarter.
Fossil is a leaner company after closing 69 stores over the past year, for a current total of 497. The company also has continued to pay down debt, which stood at $396 million at quarter's end versus $646 million a year ago. Cash totaled $242 million.
Yet despite the progress Fossil has made, management did lower guidance for the next two quarters. It will be interesting to see whether the success of the second quarter will outweigh lowered guidance in today's trading, or vice versa. The stock was down 8% in regular trading Tuesday prior to the after-hours earnings announcement, but was up in the early going Wednesday.
No matter what, Fossil remains one of the great turnaround stories of 2018. The shares were languishing in the $8 range early in the year but hit $32 in June. I closed my position above $29 in June, knowing that I'd likely leave some on the table. I am sometimes the first to the party (a downtrodden name that most others hate) but among the first to leave, though admittedly the run-up in Fossil happened a lot quicker than expected. No complaints here.
I may be breaking a cardinal rule here of not looking back once closing a position, but I am rooting for Fossil (I love the turnaround stories) and it remains a member of my 2018 Double Net Value tracking portfolio, so I really have no choice.