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Eddie Lampert Finds One Attractive Stock in Second Quarter - Avon

August 15, 2012 | About:
Holly LaFon

Holly LaFon

250 followers
Renowned investor Eddie Lampert, founder of hedge fund ESL Investments, found only one new stock for his extremely concentrated portfolio of 12 stocks: Avon Products Inc. (AVP). He bought 145,922 shares at an average price of $19.

Avon Products Inc. is one of the world's manufacturers and marketers of beauty and related products, which include cosmetics, fragrance and toiletries; beauty plus which consists of jewelry and accessories and apparel; and non-core which consists of gift and decorative and home entertainment products.

Avon’s stock became substantially cheaper in recent years, dropping 53% over the last five years and 26% over the last year. In April, it had a change of leadership. Johnson & Johnson’s Sherilyn McCoy replaced Andrea Jung, who had led the company since 1999, as CEO.

The company’s revenue has been growing for the last ten years, as earnings have declined annually since 2008. The source of the revenue has been changing over the years, as Brazil has become Avon’s largest market and Latin America showing the fastest growth. In 2011, Avon’s Latin American revenue grew almost 11%, and North American revenue declined 5.8%.

Eddie Lampert has a history of buying large stakes in retail companies and pushing for change, as he is in the process of doing with Sears Holdings (SHLD). The Avon stake, however, is too small to be an activist position and is his small holding in his portfolio.

Avon Products Inc. has a market cap of $7.03 billion; its shares were traded at around $16.02 with a P/E ratio of 15.2 and P/S ratio of 0.6. The dividend yield of Avon Products, Inc. stocks is 5.7%. Avon Products, Inc. had an annual average earnings growth of 2.8% over the past 10 years. GuruFocus rated Avon Products, Inc. the business predictability rank of 3-star.


See Eddie Lampert’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Edward Lampert.

Rating: 3.7/5 (13 votes)

Comments

kfh227
Kfh227 premium member - 1 year ago
Fortune had a good write up on Avon recently.

Basically, 10 years of a CEO that was not a good fit. New CEO is an ex-JNJ person that nearly became the new JNJ CEO.

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