• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

3 Downtrodden Stocks That Offer Glimmers of Hope

The Gap, Reading International and Valhi Inc. may have the worst behind them... maybe.
By JONATHAN HELLER
Aug 28, 2020 | 09:30 AM EDT
Stocks quotes in this article: GPS, RDI, RDI.B, VHI

For some reason, I've got Tom Petty's "Even the Losers" (get lucky sometimes) running though my head as I write this. Maybe it's because the names in this piece have all had a rough run lately; I don't believe any of them are losers, per se, and things may be looking up. Maybe....

After the bell Thursday, The Gap (GPS) , the subject of Wednesday's column, put up second-quarter numbers that were better than expected, beating consensus revenue of $2.92 billion by a healthy $360 million. The loss per share of 17 cents was better than the expected loss of 40 cents.

Gap's same-store sales were up 13%, but that figure only included stores that reopened. Online sales were up 95% year-over-year and store sales were down 48%, all of which equated to a drop in net sales of 18%. I put that in the "it could have been worse" category.

Gap ended the quarter with $2.2 billion in cash and $2.2 billion in debt, up from $1.07 billion and $1.75 billion, respectively, a win in this environment. There was nothing new on the dividend, however. It will be interesting to see how the market greets GPS shares here on Friday. They were up 2% during the day on Thursday.

In Smallville, cinema and real estate player Reading International (RDI) was up 11% Thursday on seven times normal average volume, likely due to more theaters reopening and the hope that the worst is behind the industry.

I took a position in this beaten-down name in April, primarily due to the company's real estate, the value of which did not appear to be reflected in the price. (I must admit I am rethinking real estate in general, but especially commercial, as the pandemic may be proving that work at home may be here to stay, though time will tell). RDI has been in family legal battles for many years; also, Dallas Mavericks owner Mark Cuban has been involved with RDI for years and owns 12.5% of the class B voting shares (RDI.B) , which, at $19 (up 13% Wednesday), trade at a huge premium to the A shares ($4.30).

Last but not least, it is nice to see positive movement in holding company Valhi Inc. (VHI) , which was up 25% the past two days on news that the company's 6% Class A preferred stock effectively has been cancelled, with the owner contributing it back to the company.

It has been pretty much all downhill for Valhi over the last few years; it endured a 1-for-12 reverse split in June and is down 40% year to date. In 2018, this was a $110 stock (split adjusted) that now changes hands at $13. I owned it in the 2017-2018 era, and it turned out to be a nice trade. Dumpster diver that I am, it is back on my radar, but it sure is not an easy company to understand.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long GPS and RDI.

TAGS: Investing | Stocks | Value Investing | Apparel | Chemicals | Consumer | Movies | Restaurants | Real Money

More from Stocks

I Got the 'SOS', So Here's My Take on the Stock's Saga

Timothy Collins
Feb 28, 2021 6:35 PM EST

Let's try to sort out the details of the complicated story of SOS Ltd. -- and why the short reports might be ... selling you short.

Bearish Bets: 2 Nasdaq Stocks You Should Consider Shorting This Week

Bob Lang
Feb 28, 2021 10:30 AM EST

These names are displaying both quantitative and technical deterioration.

Jim Cramer: What History Tells Us About Bond-Rate Scares Like This

Jim Cramer
Feb 27, 2021 2:01 PM EST

We could have some real pain ahead for some stocks. Five different kinds.

Navigating a Market Correction

James "Rev Shark" DePorre
Feb 27, 2021 10:00 AM EST

The most critical factor in long-term market success is the ability to effectively navigate market corrections.

Corrective Action Produces Fading Confidence and Technical Damage

James "Rev Shark" DePorre
Feb 26, 2021 5:08 PM EST

It's dangerous to have too much exposure now, but the potential for a good recovery is there once interest rate issues are digested.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login