Let's roll out the second tranche of my 2023 Tax Loss Selling Recovery Portfolio. It has been more fun putting this portfolio together this year than last given the larger opportunity set, as I noted when I revealed the first tranche of four on Monday.
Here are the second four stocks:
MarineMax (HZO) (down 45% year to date) has seen its shares fall from $59 as the year began all the way to Tuesday's $32.32 close. Being in the boating industry is not ideal when consumers are stretched and fuel prices soar. Still, the punishment may not fit the crime, and MarineMax shares trade at 4x and 5x 2023 and 2024 consensus earnings estimates, respectively. The boat retailer ended its fiscal year, which closed Sept. 30, with cash of $228 million, or $10.50 a share, and $179 million in debt. One potential sweetener is real estate; MarineMax owns 36 properties, including retail and service locations and boat slips.
Hanesbands (HBI) (down 61%) trades at about 6.5x and 5x 2023 and 2024 consensus estimates, respectively. The apparel maker has been profitable for six consecutive quarters and has beaten earnings estimates for 10 of the past 11 quarters. However, Hanesbrands has been affected by supply chain issues, inflation and falling revenue. Its debt load, at $3.9 billion ($3.65 billion net of cash), does not help in the eyes of investors. HBI pays a relatively hefty 15-cent quarterly dividend, which equates to a 9.19% yield, but there are questions about whether the company should or will cut the dividend. This one should be interesting.
Kohl's (KSS) (down 35%) was once the darling of old-style department stores, often cited for brilliant inventory management. Kohl's is not so loved any longer, which is true of many retailers. Sales have declined year over year for the past two quarters and inventories are up sharply. Kohl's also is transitioning to a new CEO. KSS shares currently trade at 9.5x and 8.5x 2024 and 2025 (January year-end) consensus earnings estimates, respectively. The 50-cent quarterly dividend makes for a 6.17% yield.
Paramount Global (PARA) (down 39%), which was behind this year's mega-hit film "Top Gun: Maverick," has not been basking in the glow of that movie's success. Television advertising weakness has been a drag on PARA shares and the company missed third-quarter earnings estimates (39 cents a share vs. a 44-cent consensus). Currently trading at 14x and 9x 2023 and 2024 consensus earnings estimates, respectively, Paramount shares yield 4.86% courtesy of the 24-cent quarterly dividend. There's significant debt here, to the tune of $15.8 billion, countered by nearly $3.4 billion in cash.
These are some names with challenges for sure, but keep in mind the objective of this portfolio -- to identify potential rebound candidates for the coming year.
Tranche 3 is next.
