I think the neighbors thought I was crazy late Tuesday afternoon as I started putting a new roof on our home. Most people would do the smart thing and pay a professional roofer to do the job, but I find it to be very satisfying work; there's a beginning and an end, and progress is easy to see and measure. Plus, it does not hurt that I'll save a few bucks, which is music to the ears of a value investor.
Speaking of measuring progress, and cutting costs, former powerhouse Tupperware Brands (TUP) continues its comeback, and should go down as one of the great turnaround plays of the year. The well-known brand has seen sales and profits slide for years, and the former cash-cow put up a couple of money-losing quarters this year, and sunk to the depths. It looked like game-over, especially given the rather heavy debt load.
But following a much better than expected third quarter, aided by cost-cutting, the stock has shown no signs of slowing down. In fact, TUP is up 71% since then, and 208% year-to-date.
On Tuesday TUP closed the day up nearly 11%, after something fairly rare happened. One research firm, D.A. Davidson in this case, initiated coverage on the stock with a "buy" rating and $30 price target. It's always interesting to see new coverage initiated relatively deep into a stock's upswing; as a reminder, TUP boasts a $1.15 intraday low it descended to on March 17.
TUP, a member of this year's vintage of my Tax-Loss Selling Recovery Portfolio, currently trades at 11x next year's consensus earnings estimates. Indeed, estimates have been trending higher; two months ago, the consensus had next year's earnings at $2.00/share, the current consensus is $2.41. For historical perspective, TUP's seven-year average price/earnings ratio is about 28, not that it deserves that multiple at this point; there is still much to prove.
Admittedly, I have a defined holding period for my TUP shares, which were purchased along with the other 11 names in the Tax Loss Selling Recovery Portfolio in an effort to have some skin in the game in the experimental tracking portfolio I concoct. They will all be sold sometime in December, and the proceeds used to buy the constituents of new Tax-Loss Selling Portfolio.
If you need me, I'll probably be up on the roof.