Find The Best Stocks With Perfect Trade Setups In Minutes A Day

Stop wasting time looking for the right stocks.  Free training on how to find perfect stock trades that can move 300-1,500%.  Learn the # 1 key to successful stock investing and how to find success even If the market is crashing, rebounding… or just going sideways. (ad)

Do Not Delay - Click Here Now


ENR’s discount is impressive – what about its fundamentals?

If you’ve followed my posts in this blog for very long, you know that my preference when considering a stock as a new investing opportunity is to look at it from a combination of fundamental strength as well as value. It isn’t enough to simply find a company with a strong book of business and a healthy balance sheet; I find the best odds of success come when I can also make a good case that the stock should be worth more than it is today.

Hey, did you know if you really want to retire early, this free training lays it all out for you! Check it out here.

One of the quickest ways to determine if a stock might represent a good value is to just look at its current price activity. It’s natural to assume that a stock that has been going up should continue to do so; after all, one of the core tenets of technical analysis is that a stock tends to follow the direction of its trend. I’ve found better success in mining bargain opportunities by looking for the reverse, and picking stocks that are currently on the lower end of their historical trading ranges.

My bias towards stocks that the market has beaten down has given me a nice way to uncover a number of under-appreciated gems throughout the course of this latest bull market. It’s a method that that is better suited to any potential downturn the market could see into a bear market, whenever it happens. However, the mere fact that a stock is trading at a major discount to its recent history doesn’t automatically it is a good value; the fundamentals also have to be strong enough to suggest that there is healthy growth potential lying in wait.

Energizer Holdings, Inc. (ENR) is an intriguing example. Over the last year, the stock has declined a little over -35% from a peak at around $65.50, but has picked up some good bullish momentum in the last month, rallying off of a trend low at around $32.50 per share. ENR is a small-cap stock with an easily recognizable name; does its extended decline, and recent rally imply the time is right to jump in? Let’s take a look.

Fundamental and Value Profile

Energizer Holdings, Inc. is a manufacturer, marketer and distributor of household batteries, specialty batteries and lighting products. The Company is a designer and marketer of automotive fragrance and appearance products. It operates through four geographic segments: North America, which consists of the United States and Canada; Latin America, which includes its markets in Mexico, the Caribbean, Central America and South America; Europe, the Middle East and Africa (EMEA), and Asia Pacific, which consists of its markets in Asia, Australia and New Zealand. The Company offers batteries using lithium, alkaline, carbon zinc, nickel metal hydride, zinc air and silver oxide constructions. These products are sold under the Energizer and Eveready brands in the performance, premium and price segments and include primary, rechargeable, specialty and hearing aid products. It manufactures, distributes and markets lighting products, including headlights, lanterns, kid’s lights and area lights. ENR’s current market cap is $2.9 billion.

Earnings and Sales Growth: Over the last twelve months, earnings declined about -31.5%, while revenues were almost 65% higher. In the last quarter, earnings and sales both increased; earnings grew by 85%, while sales improved a little over 16%. ENR operates with a very narrow margin profile, with Net Income over the past twelve months that was just 2.86% of Revenues; in the last quarter, this number deteriorated by more than half, to a mere 1.14%. These are razor-thin numbers that don’t give ENR any margin for error, and are a significant concern.

Free Cash Flow: ENR’s free cash flow is just $4.4 million, and translates to a Free Cash Flow Yield of 1.48%. At the beginning of 2019, Free Cash Flow was a little over $189 million, which marks not only a significant decline but adds an additional, major red flag.

Dividend Yield: ENR’s dividend is $1.20 per share, which translates to an annual yield of about 2.83% at the stock’s current price.

Debt to Equity: ENR has a debt/equity ratio of 6.12. This is an extremely high number, and is primary explanation of the stock’s narrow operating profile. The balance sheet shows a little over $206 million against about $3.5 billion in long-term debt. The concern is that ENR may not earn enough from day-to-day operations to cover interest payments, which means they will have to draw from available cash; this is already a bit limited, and unless the company can show some improvement in cash flow and net income, liquidity is likely to worsen.

Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for ENR is $8.17 per share. That translates to a Price/Book ratio of 5.18, which is high compared to the Price/Book levels I usually look for. The company, unfortunately has not had a useful Book Value long enough to make comparing the current value to historical a useful metric; but in its place we can use the industry average, which is 3.12 an implies the stock is overvalue by almost -40% and puts the stock’s “fair value” at a little below $26 per share.

Technical Profile

Here’s a look at the stock’s latest technical chart.

Current Price Action/Trends and Pivots: This chart traces the stock’s movement over the last two years. The stock’s rally from the bottom of the trend in the last month has been impressive, and pushed the stock to a recent high at about $45 per share. The stock has retraced a bit from that point, and appears to be near support from previous pivots at around $42. If that support holds, and provides the stock with a point for a new pivot low, it could push above that recent peak at around $45; that could act as confirmation of the current short-term upward trend and provide room to run to somewhere between $52 and $53, based previous pivots last seen in spring of 2018. If the stock drops below $42, its next support is probably around $40, but continued weakness from that point could push the stock as low as about $37.40 per share.

Near-term Keys: If you’re looking for a short-term, bullish trade, look for a break above resistance at $45 as a good signal to buy the stock or to work with call options. If the stock shows weakness, and pushes below support at $42, consider shorting the stock or working with put options. Given the fundamental problems ENR shows, particularly in its deteriorating Net Income, weak Free Cash Flow and high debt load, there really is no way to call this stock a good value, or even to suggest there is a fundamental reason it should be higher than it is today. From that perspective, ENR offers more downside risk than reward potential.

By the way, if you liked this article, you'll LOVE this Meaty free training I just published on the top 3 questions and challenges every investor faces AND how to overcome them. It's titled "10k into $2.4 Million in 18 months" and you can grab it for free here

There are risks inherent in all investments, which may make such investments unsuitable for certain persons. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. You may lose all of your money trading and investing. Do NOT enter any trade without fully understanding the worst-case scenarios of that trade. And do NOT trade with money you cannot afford to lose. Past performance of an investment is not necessarily indicative of its future results. No assurance can be given that any implied recommendation will be profitable or will not be subject to losses. Information provided by the Company is not investment advice. The Company is not a registered investment adviser, stock broker, or brokerage. You agree that the Company does not represent, warrant, or take responsibility that any account will or is likely to achieve profit or losses similar to those shown. Examples published by the Company are selected for illustrative purposes only. They are not typical and do not represent the typical results of all stocks within the Companys software or its individual scans and searches. No independent party has audited any hypothetical performance contained at this Web site, nor has any independent party undertaken to confirm that they reflect the trading method under the assumptions or conditions specified.

FREE TRADING WEBINAR - TRADERSPRO PRESENTS: Starting With Only $10,000 Retire With $2.4 Million? Click Here Now

Join Us Now