It always seems darkest before the dawn. It's been dark and bleak at Blyth for over a year. Sales have dropped like a stone - revenue growth is down over 20% and earnings growth is down over 50%. The street likes companies that are growing, not companies that are shrinking.
In 2012 Blyth had revenues over $1.1 billion, in 2013 just over $800 million. What does 2014 have in store? That is the question for shareholders and one not easily answered. However I think the recent reaction to Blyth's earnings report provided a clue into where the stock could be headed over the short to medium term.
When $BTH Blyth, Inc. reported earnings this month the stock had every reason to decline, yet it rallied instead. Headlines stated $BTH Blyth, Inc. stock rose "despite missing estimates". What does that tell me? The bleeding has stopped for $BTH. Another sign is the double bottom for $BTH earlier this year just under $9 a share as the chart below shows.
The company also announced a dividend for the year. While not big dividend, the fact that the company approved a dividend shows the company is strong despite the sell off in 2013.
I have harped upon the massive short interest in the stock. And while it may prove to be a factor in 2014 as $BTH rises in price, I think earnings and growth will be what drives the stock this year and beyond. The 55%+ shorts may want to revisit their investment thesis in the name this year, however the price of the stock may dictate it for them.
$BTH remains a long term turn around trade and by the time the turn around is in 3rd gear this will be a $20+ stock. Money isn't made in this market buying at the top - just ask the herd that was buying $FB at $71 a share.
Money is made buying stocks no one likes. Stocks that are mispriced because the market does not understand them. $BTH is one of those stocks. The company reported over $800 million in revenue last year and over $55 in revenue for each share outstanding. They have a solid financial foundation and insiders who believe, based on last years buyout rejection, that the stock is worth well over $16 a share. Yet here we are at just over $10 a share. A move back to that buyout offer from late last year represents a 60% move from current levels.
I own and will be a buyer of calls for $BTH in 2014 in anticipation of a solid move to the upside. As the stock continues to recover from its 2013 collapse, I think a move to $13 in April is in the cards and the stock has a good chance at reaching over $20 a share before the end of 2014. The bleeding is over. The stock, in my view, has bottomed. And in 2014 we could witness a resurgence for $BTH.
One thought on “$BTH Blyth, Inc. Why Shares Should Head Higher”
I’m with ya on the ride for this one! Loaded up on April and June calls and will add as we go up!