With the S&P 500 down 8% year-to date, the Russell 2000 off 9%, and uncertainty in the air, I am on the hunt for undervalued names. But with markets so volatile, I am cautious on my buys, and looking for opportunities on days the markets overly punish certain stocks.
Here are a handful of names that are looking interesting right now.
Crocs
Footwear maker Crocs (CROX) , had a cult-stock like feel several years ago. It may have seemed like a fad at the time, but the company has lived to tell a different tale.
From the outset of the pandemic, through this past November, CROX shares shot up 15-fold to the low $180 range. Since then, CROX has pulled backed considerably, closing at $79.54 on Thursday. That pullback makes CROX shares appear fairly cheap at these levels, trading at just 8x 2022 consensus earnings estimates and 6.5x 2023 estimates.
CROX gets a lot of coverage, with 10 analysts weighing in. The company ended its latest quarter with $213 million in cash and $771 million in debt, putting the enterprise value (EV) at about $5.3 billion, and trailing EV/EBITDA at just 7. Net profit margins have been huge lately; last year's was 31.2%.
eBay
Here's and oldie but a goody, a former growth name that I never thought I'd own, but did several years back when it was very cheap. eBay (EBAY) continues to fascinate me as a consumer; in fact, it is one of the very few sites I peruse daily. This year has been rough so far, though, as the shares are down about 17% year-to-date. EBAY currently trades at just 13x 2022 consensus estimates, and 11.5x 2023 estimates.
Interestingly, eBay has a run of 15 consecutive positive quarterly earnings surprises, and that's with more than 30 analysts typically covering the name. I'm not quite sure what to make of that, but regardless, the shares are looking cheap.
While not much of a sweetener, EBAY currently yields about 1.6%. However, it recently raised the quarterly dividend 22% to $0.22. I do like the fact that the company is not only increasing the dividend, but also buying back shares. Last year, it repurchased more than $7 billion worth, and decreased shares outstanding by 12%.
EBAY ended its latest fiscal year with $9.9 billion in cash investments (short and long-term) and $9.1 billion in debt.
G-III Apparel
Last but not least, but perhaps more speculative (than EBAY anyway) is G-III Apparel Group (GIII) . While it operates in a very competitive business, G-III has some very interesting attributes.
First, the stock trades at less than 8x next year's consensus estimates, and just 3.3x net current asset value (NCAV). The shares were up 14% on Thursday as the company reported much better-than-expected earnings ($0.98 cents vs. $0.64 consensus). (Real Money Pro's Paul Price has been all over this name for a while, recommending the stock back back in May 2020 when it was trading at $9.20!)
There was another announcement, however, that caught my attention: G-III has increased its stock buyback program to 10 million shares (from the 2.3 million left on the prior authorization). Now, if it will just follow through, and opportunistically reduce shares outstanding, that could send a positive signal to investors. The company does have a healthy amount of cash on the books, $280 million as of year-end.
