Orchids Could Bloom Again After Withering Competitive Pressure

Orchids Paper Products (TIS) has been an awful call for me over the past 18 months, as this manufacturer of primary private-label tissue products was hit hard by pricing moves from the competition and its own elevated costs and challenges tied to getting a new plant up and running. At the worst, the company saw revenue drop more than 20% year over year, leading to its first quarterly operating losses in a decade, serious liquidity pressures, and the suspension of the dividend. With all that, the shares are less than half the price they were the last time I wrote about this company.

On the positive side, the company's new Barnwell facility is up and running, the company has been successful in targeting more premium business, and the book of business over the next year would suggest record revenue and EBITDA. On the negative side, price and cost pressures remain a risk and the company must do something about its liquidity situation, as there is little room for error here.

I believe a lot of things went wrong for the company all at the same time, but I don't believe the story is broken. If the new business comes through as expected, Orchids should be back on a path toward high-single-digit/low-double-digit revenue growth and a return to operating and free cash flow margins in the mid-teens. Those, in turn, support a fair value in the mid-to-high teens, making Orchids a high-risk story that does at least offer some upside.

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Orchids Could Bloom Again After Withering Competitive Pressure

Seeking Alpha: Multi-Color Showing Better Margins With Improving Growth

Making labels for consumer products like dish detergent, food, and beverages is not exactly a sexy business, but Multi-Color (NASDAQ:LABL) continues to operate its plan to good effect. Although Multi-Color isn't widely followed on the Street and doesn't have huge liquidity, investors in this combo story of steady organic growth, serial acquisitions, and margin leverage have done well over the past year.

Better still, organic growth seems to be picking up and margins continue to develop nicely and the company is just starting to tap into incremental growth opportunities like healthcare labels. I don't think these shares are particularly cheap at this point, but I'm not in any hurry to sell out of a position where the underlying story appears to be getting better.

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Multi-Color Showing Better Margins With Improving Growth

Seeking Alpha: Hypermarcas Offers A Brazil Play With Double The Punch

This has been a lousy stretch for owning Brazilian stocks, particularly those exposed to the Brazilian consumer. If you believe that what comes around in forex rates also eventually goes around, and that the Brazilian consumer market is an attractive one for the longer term, this may be a good time to consider Hypermarcas (OTCPK:HYPMY). A little like the Johnson & Johnson (JNJ) of Brazil, Hypermarcas is a leader in over-the-counter, branded generic, and generic pharmaceuticals, as well as consumer products like diapers, lotions, condoms, and various beauty/cosmetic/oral care products.

Like most Brazilian stocks, the moves in the dollar/real exchange rate have worsened an already difficult situation, and HYPMY shares down almost 30% over the past year (versus just under a 15% decline for the HYPE3.SA shares). With that, I believe the shares are priced to deliver an above-average annual return (relative to the S&P 500) on the strength of low-to-mid teens cash flow growth.

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Hypermarcas Offers A Brazil Play With Double The Punch

Seeking Alpha: Spectrum Brands Has The FCF Juice, But Valuation Is Trickier

Debt-fueled acquisition stories often have unhappy endings, and Spectrum Brands (SPB) has already gotten itself into trouble before. That was then, though, and the company's mix of consumer products (many of which are positioned as leading value brands) has been generating better free cash flow of late. Add in some leverage to the housing recovery through the acquisition of Stanley Black & Decker's (SWK) HHI segment and this is a more interesting story than it was even just a year ago.

It's not a story without some risks. The company has an especially high debt load, and the ownership/intentions of Harbinger Group (HRG) adds an element of uncertainty not present at companies like Jarden (JAH) or Helen of Troy (HELE). Moreover, I wouldn't rule out the risk of Spectrum's brands getting squeezed between consumers still willing (and able) to pay up for the premium brands and those consumers who turn to even cheaper private label or imported brands. Valuation is likewise a tricky matter, as the shares trade above past norms and only look cheap on a cash flow basis if you ignore the large debt load.

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Spectrum Brands Has The FCF Juice, But Valuation Is Trickier

Seeking Alpha: Orchids Paper Products Is Small And Solid, But Not So Cheap

Small, illiquid, and under-followed companies can be above-average alpha generators, as they are often overlooked by analysts and institutional investors or outright disqualified due to their low liquidity and so on. It's not always the case, though, that these small gems are cheap. In the case of Orchids Paper Products (TIS), I believe this is an interesting paper products manufacturer with an opportunity to further diversify its customer base and go up-market. I also believe, though, that despite a lack of sell-side coverage and institutional ownership, it's really not as cheap as I'd hoped it might be.

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Orchids Paper Products Is Small And Solid, But Not So Cheap

Seeking Alpha: Too Many Questions To Get Comfortable With PhotoMedex

Sometimes you go into researching a company expecting to find one thing, and you come out with a completely different idea of a company. When I first started digging into PhotoMedex (PHMD) a few months ago, I thought I was going to be looking at a company that was something like DUSA Pharmaceuticals (acquired by Sun Pharmaceuticals back in December of 2012), Cynosure (CYNO) or Solta Medical (SLTM).

Instead of finding a dermatology med-tech company, I feel that PhotoMedex is more of a consumer products company with a small medical business attached. What's more, digging around turned up some concerns with customer service/satisfaction and evidence that this is a company eager to get its message out to investors. While I suppose the valuation is not that demanding given the recent trends in reported growth, I just can't get comfortable enough with the company to find the stock appealing today.

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Too Many Questions To Get Comfortable With PhotoMedex

Seeking Alpha: Helen Of Troy Not Looking Like A Cheap Date Today

I've written on Helen Of Troy (HELE) plenty of times over the years, and it has long been a great stock for writers and stock pickers because it's quite a bit more volatile than you might expect from a maker of deodorant, hair dryers, and vegetable peelers. At the same time, it's well worth noting that the company has a pretty good record of delivering high single-digit returns on capital and acquiring under-developed brands/businesses that thrive with a little more direct attention.

Right now, the company is having a little trouble finding attractive deal candidates, while investments in a new distribution center compresses free cash flow. I don't think these shares are much of a bargain today, but I'd certainly keep this one on the watch list.

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Helen Of Troy Not Looking Like A Cheap Date Today

Investopedia: Investors Can't Seem To Get Enough Of Hershey

I have to give credit where it's due – Hershey (NYSE:HSY) is definitely one of the strongest stories in packaged/branded food today. While there are a few relative newcomers showing better volume growth (from a much smaller base), Hershey continues to lead the way when it comes to the large U.S. companies. Better still, Hershey is mixing that growth with strong margin leverage and making a pretty pleasing combo. Although I still think these shares carry a premium valuation, it's hard to argue with a story where management is making so many of the right moves.

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Investopedia: Given Procter & Gamble's Performance, Should The Weak Volumes Matter More?

Investors seem to love gaudy expense-reduction programs, and Procter & Gamble (NYSE:PG) shares have certainly done better since Bill Ackman's Pershing Square got involved and management announced a $10 billion cost-cutting program. P&G's performance isn't so unusual in the wider context of a hot market for consumer staple stocks, but it's looking more and more like investors are overpaying for the margin improvement potential and earnings consistency of these names. Barring a quick turnaround in volumes, it looks like P&G shares have overshot the mark and offer less compelling potential from today's level.

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Investopedia: Kimberly-Clark Looks Way Too Expensive For What It Is

Investors can certainly make good money investing in well-run personal care companies with solid brands. Along those lines, names like Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL), Unilever (NYSE:UN), and Kimberly-Clark (NYSE:KMB) have all delivered very strong capital gains over the past year. In the case of Kimberly-Clark in particular, though, I do worry that this consumer staples melt-up has gone a little too far. I do like the company's growth potential in emerging markets, but commodity inflation could threaten further margin improvements and I believe the stock is too expensive relative to its growth prospects.

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Seeking Alpha: Expensive And Hard To Own, Natura Cosmeticos Is Still A Great Brazil Play

Brazil may be a popular topic in international investing, but it's actually not all that easy to invest in some of the best Brazilian growth stories. Such is the case with Natura Cosmeticos (NUACF.PK). Natura is a true Brazilian success story and a fantastic play on the Brazilian consumer, but the U.S. ADR has virtually no liquidity and Brazil is an "institutions only" market for foreign investors. That said, there are readers who can buy these shares and even if you cannot own Natura today, it's a stock well worth following if you want to know more about what's going on in Brazil beyond the government-reported statistics.

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Expensive And Hard To Own, Natura Cosmeticos Is Still A Great Brazil Play

Investopedia: P&G Rewards Longs With Better Sales And Stronger Margins

Although I recently suggested that Wall Street has already amply rewarded Procter & Gamble (NYSE:PG) for its self-improvement potential, the company showed in its fiscal second quarter results that it may still have more on the table. While incrementally less momentum in developing economies could eventually develop into another problem to address, P&G management is simultaneously delivering on product innovation/introduction and cost cutting.

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http://www.investopedia.com/stock-analysis/2013/PG-Rewards-Longs-With-Better-Sales-And-Stronger-Margins-PG-UL-KMB-JNJ0130.aspx

Investopedia: Helen Of Troy Needs To Exploit Distracted Competitors

Acquisitions can obviously expand a company's operations, but even growth-by-acquisition stories ultimately come down to a company's ability to execute. Helen Of Troy (Nasdaq:HELE) has always been a willing (and aggressive) acquirer, and that has allowed management to build the company into a diversified collection of well-known home and personal care brands. The question now, however, is whether this company can take advantage of the rampant restructurings among its larger rivals to widen its niche and gain market share.

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Investopedia: Investors Seem To Already Buy Into Procter & Gamble's Turnaround Story

Turnarounds can be great investments, but you generally have to buy in at a point where the Street is still questioning the survivability of the company and pushing for dramatic, sweeping changes. In the case of Procter & Gamble (NYSE:PG), the pressure is still very much on management to deliver better results, but the shares don't reflect all that much uncertainty or pessimism about the company's prospects. On the contrary, it looks like the Street already pretty much expects this story to have a relatively happy ending.

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Seeking Alpha: Can Labelmaker Multi-Color Make The Leverage Stick?

Multi-Color (LABL) is the sort of obscure small-cap company that I love; the company's products are ubiquitous and essential (product labels), but nobody really ever thinks about them. What's more, Multi-Color is a good play not only on the overall volume growth of consumer goods, but also on the increasing sophistication of labels and the very fragmented nature of the industry. While Multi-Color is not a very liquid or well-covered stock, I believe patient investors will be impressed with what this company becomes over the next three, five, or 10 years.

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Can Labelmaker Multi-Color Make The Leverage Stick?

Investopedia: Teva Likely To Tread Water Ahead Of New Strategy

It is perhaps a little ironic that generics giant Teva Pharmaceutical (NYSE:TEVA) finds itself in a position similar to what it helped create for many other pharmaceutical companies over the years. The company is facing increasing competition for its blockbuster MS drug Copaxone, while also having to deal with more pushback on pricing and a thinning pipeline for major generic releases. While Teva does have to face up to some near-term challenges, success with biosimiliars and a decision from management to double-down on internal efficiency and profitability would likely go a long way toward improving investor sentiment.

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Investopedia: Helen Of Troy Wilting Into The Fall

As a small, highly-leveraged company that must compete with brand-name goliaths such as Clorox (NYSE:CLX), Procter & Gamble (NYSE:PG) and Unilever (NYSE:UL) on a daily basis, it's not altogether surprising that Helen Of Troy (Nasdaq:HELE) shares can be very volatile. Today's poor growth numbers are certainly a concern, as are the company's long-term market position and cash flow leverage, but aggressive investors may see opportunity emerging in a company that has often been knocked down, only to rise once again.

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Investopedia: Stanley Black & Decker And Spectrum Brands Both Get What They Want

Stanley Black & Decker (NYSE:SWK) wants to be involved with businesses with global reach, as well as find a happy medium between consumer, construction and industrial market exposures. Spectrum Brands (NYSE:SPB) wants quality brands that can offset competition from Procter & Gamble (NYSE:PG) and Energizer (NYSE:ENR), while also producing good cash flow. These two wants came together on Tuesday morning with the announcement that Spectrum Brands is buying the Hardware and Home Improvement (HHI) business of Stanley Black & Decker for $1.4 billion in cash.

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Dividend.com: Profiling 7 Companies That Have Raised Dividends For 25 Years

There is more to successful dividend investing than simply spotting high yields. Rather, the most successful dividend stock investments are those where the company’s underlying fundamentals continue to improve and where ongoing free cash flow growth can continue to support higher payouts. The following, then, are seven companies that have been uncommonly strong dividend growth stories over the past 25 years.

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http://www.dividend.com/blog/?p=52107

Investopedia: Helen Of Troy Needs To Find Margin Leverage

Helen Of Troy (Nasdaq:HELE) is a classic second-chance stock. Between management's aggressive M&A philosophy and the ups and downs of the value-priced home and personal care market, these shares are surprisingly volatile for a company that markets shampoo, deodorant, garlic presses and the like.

I do like the relative scarcity value of this company, not to mention the leverage potential of acquiring neglected brands and pushing them through a surprisingly strong retail distribution network. Accordingly, while these shares are not a screaming bargain today, they are starting to look interesting for more risk-tolerant investors.

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http://stocks.investopedia.com/stock-analysis/2012/Helen-Of-Troy-Needs-To-Find-Margin-Leverage-HELE-PG-UL-CLX0710.aspx