Could HELE be as Beautiful as the Original Helen of Troy?
Summary
- Averaged a 42.05% return annually over the past three years.
- HELE’s piotroski score has consistently increased over the past three years.
- Jim Cramer has given HELE a buy rating.
In the words of Yahoo Finance, Helen of Troy(NASDAQ:HELE) “designs, develops, imports, markets, and distributes a portfolio of consumer products worldwide. It operates through four segments: Housewares, Healthcare/Home Environment, Nutritional Supplements, and Personal Care.”
Helen of Troy(NASDAQ: HELE) gives us many reasons to want to buy it, including:
- HELE shows up in the “High Piotroski and Low PE top 10” screener within Equities Lab
- HELE has held a roughly constant beta of around 1.5. As of July its beta dropped to the current 0.77.
- HELE net income has grown $50 million over the past three years.
High Piotroski and Low PE Top 10
this screener selects stocks that rank under the small cap classification, and whose financials suggest high value and large growth opportunities. These stocks are then sorted based on their balance sheet score and the top ten stocks are selected for the screener.
- Companies must have a piotroski score greater than seven at the time of screening.
- The market cap of the company must be between $100 million and $8 billion dollars, thus a small cap company.
- The P/E must be positive and rank in the bottom 25% of the industry.
The picks that result from this screen traverse across almost every industry. These companies have had success in the past, and their fundamentals suggest that they are poised for even higher growths. These possible growths are proven through a backtest of the companies within this screener over the past twenty years.
Running this backtest with a quarterly rebalance, you would consistently hold 10 positions, making a total of 1089 trades over the past twenty years. This strategy, over the past twenty years, averaged 21.41% annually which results in a total return of 5613.65% return. The beta of this strategy maxes out at 2 in 2008, but primarily stays in the 1-1.5 range, beating the market by a considerable margin while not taking on equivalent risk.
When comparing this strategy to the S&P 500 over the past twenty years on a yearly basis is extremely telling. In the years that this strategy was up with the S&P it outperformed considerably. Also, in the years that both this strategy and the S&P were down this strategy fell less than the S&P, ie. The 2008 Great Recession.
Green Flags
-Analysis Score: Over the past three years HELE’s analysis score, a green flag indicator that looks for an increase in value over the past few years, and is ranked out of seven. HELE scores a perfect 7/7 when it comes to this score.
-Decreasing Shares Outstanding: From January 2012-July 2014 HELE had a roughly constant shares outstanding. However, in July of 2014, HELE’s shares outstanding decreased by roughly 4 million shares and has stayed this way over the past year.
Summary:
Personally, I am a sucker for value stocks. Since I started investing I have tried any number of investment strategies, and nothing is as consistent in performance as investing in value. Now, when investing in value you won’t be seeing 30-40% a year, but you will be collecting a nice little rate that no real investor will stick their nose up at. HELE is exactly the type of value investment that I would go for. It has fantastic fundamentals, and has strong green flags associated with its stock. The strategy that selected HELE is tested and proven over the past twenty years, and so is HELE. This may be something I add to my portfolio at some point in the distant future.