While I tend to prefer the off-the-beaten path and deeper-value investment ponds that few others are interested in, I can go more mainstream as well. It's just not as fun to cover names that draw a great deal of attention because it's difficult to uncover any new information about them.
However, recently I've been looking for some larger names that have been out of favor, are relatively cheap and offer investors fairly high yields. Here are three that are intriguing.
Kraft Heinz Co. (KHC) has been a disaster for a few years now and has been in negative return territory for the past three years; that includes last year's 22% drop in a year that the S&P 500 was up 31.5% and 2018's disastrous 41% shellacking. It made my 2018 Tax Loss Selling Recovery Portfolio and was the second-worst performer. Kraft Heinz stock now appears to be stabilizing. It currently trades for 12x next year's consensus earnings estimates and it carries a 5.2% dividend yield. This who's who of consumer brands does carry a lot of debt, but that has not scared away Warren Buffett (yet, anyway), whose Berkshire Hathaway (BRK.B) owns about 27% of the company.
Harley-Davidson Inc. (HOG) also has had a rough run the past few years. It was down 30% in 2018 but up 13% last year, though it again was well off the pace of the broad markets. Revenue has been slipping, demographics for its products are not what they once were and tariff issues have also hurt. However, HOG appears to be priced accordingly, trading at about 10.5x next year's consensus estimates and yielding 4.2%. Harley-Davidson has been a serial buyer of its own stock, reducing shares outstanding by 30% over the last seven years.
And Tapestry Inc. (TPR) has also seen better days. Its shares were down 21% in 2018 and 16% last year. Its strategy to build a multi-brand company, including the Kate Spade acquisition in 2017, has not panned out as yet. I still question the company's 2017 name change to Tapestry from Coach; I believe it was an ill-advised move that has not helped matters. Coach had a great deal of name recognition, while Tapestry does not.
Tapestry has been on my radar for a few years, but I've held off from taking a position. TPR currently trades at 10x next year's consensus estimates and yields 5%; it is not held in high esteem by the markets.
I would like to see Tapestry take a page out of Domino's Pizza's (DPZ) book, which a decade ago launched a brilliant ad campaign admitting that its pizza was not up to snuff and announcing a formula change. Tapestry should consider changing its name back to Coach, which could be the centerpiece of an advertising blitz, with an admission that the name change to Tapestry was a mistake. That could be good for a 5% one-day move.