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Hawk’s Nest

Small-Cap Personal Care Company Draws Bull Flow Ahead of Portfolio Moves

by | May 31, 2022

Spectrum Brands (SPB) forming a weekly bull wedge under $90 recently and bullish flow on Friday with 1000 June $90 calls bought for $3.50. This follows buyers at the strike on 5/26 as well while the July $85 calls remain in OI from buyers in December. SPB shares are starting to move outside of monthly value and room higher to $100. The $3.65B company trades 18.65X earnings, 1.6X sales, and 18.7X cash with a 1.87% yield. SPB operates a number of branded consumer products across Home and Personal Care; Global Pet Care; and Home and Garden. They have notable brands like Black & Decker, George Foreman, Remington, Nature’s Miracle, IAMS and more. SPB has been shifting investment dollars into their higher-return businesses recently as well as strategic M&A and could divest more assets in 2022 as they reshape the overall look of the firm. The company is cutting back on debt after the HHI deal and on pace to separate their HPC business following the close. Analysts have an average target for shares of $121.50 with a Street High $125. RBC a bull on the name noting earlier this year noting they like the look of the company post-HHI divestiture and the outlook for FY22 were more optimistic than expected. Spectrum Brands has been impacted by executional mishap over the last few years, but he now sees it as headed in the right direction, with the stock significantly undervalued at current levels. Short interest is 3.8%. in March, the CEO bought $200K in stock at $77. Hedge fund ownership rose 2% last quarter.