Just Plain Ugly
Here is a discussion of my 8th favorite stock, TreeHouse Foods - THS
There is a small group of stocks you just might want to pick from. I call it the Just Plain Ugly group.
These are stocks that are so unpopular, other value investors will often laugh when you mention the company name. Normal investors will immediately run from the room.
One rough definition of these stocks is any stock having less than 30% buy recommendations.
Let’s start by reminding you that. I consider any Hold recommendation as the equivalent of a Sell recommendation. Most firms do not allow sell recommendations if there is any hope of doing banking business.
On average:
Firms with 60-70% buy recommendations have average popularity
Firms with only 50% buy recommendations have below average popularity. Right now Keurig Dr Pepper - KDP - is quite unpopular, they have 10 buys and 10 sells.
Firms with about 30% or below buy recommendations qualify as Just Plain Ugly
Treehouse Foods make private label cookies, candies, pickles, and soup broth. They have been restructuring since Moses was a young man. The stock sells around book value, and only 2 of the 10 analysts following the stock have a buy recommendation.
I see a faint glimmer of hope. Private label should gain share during inflation. The smart guys at Jana Partner own 10% of the stock, and have put folks on the Board of Directors. Jana Partners were the guys that got Whole Foods to restructure and eventually sell themselves. The balance sheet has improved.
Others in this JPU group:
Advance Auto Parts - 0 buys and 26 Hold/Sells, perhaps an all-time record, but the company is having accounting problems
Goodyear Tire - only 30% buys
Walgreens - only 15% buys
Whirlpool - only 22% buys
coal stocks have a few buys, but they generally get a laugh if you mention them
there are many more, but there no way to screen on this variable, so you just have to find them yourself. Start with any low price/book list.
Again, you do not want to build a portfolio of these stocks, but one or two is ok.
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Top 10 stocks in order:
Corteva - CTVA
Tyson - TSN
Royal Gold - RGLD
Chart Industries - GTLS
Kinder Morgan - KMI
Red Rock Resorts - RRR
Smith & Nephew - SNN
Treehouse Foods - THS
Cable One - CABO
Unifi - UFI
Restructuring since Moses was young :)