Once I move on from a name, I typically try not to look back. I use the word typically because occasionally I'll be drawn back if something is cheap enough. That's sort of what happened with retailers CATO Corp (CATO) and Fossil (FOSL) .
However, these were not my typical value plays as they were severely mispriced back in 2018, fallout from specialty retail's presumed demise in those days. The damage done was swift, and went too far. The turnaround was even more swift, and I closed the positions in late 2018 for more than I thought each was worth. My typical holding period is several years and these positions were held for several months. By late 2019, the market had again given up on FOSL, despite great progress made by the company. Last December, ditto for CATO.
Now, I've been seeing what has happened to VOXX International (VOXX) , a former net/net, that I followed for years, and finally bought in early 2018. VOXX was perennially cheap. That's not usually a good thing because it typically means that it is wired to appear cheap, but with good reason. The stock did nothing, the markets did not "catch-on" to what a great bargain it was (or I was just plain wrong), and I sold it after 18 very boring months for the same $4 and change I paid for it.
Early in the pandemic, VOXX fell below $2/share, and my exit point looked great. You can probably guess what happened next. VOXX shares took off over the following year, all the way up to about $28 by mid-February. Revenue and earnings took off as the auto sector rebounded, and all of a sudden, investors could not get enough of VOXX, at least for a while. The company even picked up some analyst coverage, which it had not had for years.
Since then, however, VOXX has been trounced, closing Thursday at $10.78. The luster has worn off quickly, and although first quarter results were better-than-expected, the company warned that second quarter results will be impacted by "supply chain costs and shipping delays". Not what investors wanted to hear.
I am at the very least curious here about VOXX. The company currently trades at 1.81x net current asset value or NCAV (current assets - total liabilities), and 1.12x tangible book value. It ended the latest quarter with $38.4 million or $1.60 per share in cash and investments, and $6 million in debt. Shares trade at about 12x next year's "consensus" analyst estimates, however with but one analyst currently covering it.
At this point, the most I can say is that VOXX is back on the radar. If the downside momentum continues, I may have to break my "don't look back" rule once again, but I'd need a greater margin of safety.
