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Central Garden & Pet Co.

CENTRALPET185Year-to-date return: -31%

Central Garden & Pet Co. (CENT) — one of the largest pet and garden suppliers in the U.S. — is down 31% year-to-date. It currently trades around 50% below its five-year high just under $15 and has essentially missed the entire stock market recovery.

In the past, Central operated in a very decentralized manner and attempts to remedy that have been unsuccessful. In 2011, the company hired turnaround specialist Gus Halas as CEO. His goal was to extract $120 million in annual savings by September of next year, and more importantly transform the company into one cohesive, profitable unit with operating margins in the double digits.

He stepped aside in January, though, and the company then hired experienced consumer products executive John Ranelli to continue the transformation. Things haven’t gone well in Ranelli’s first eight months on the job: Third-quarter earnings slid 30% year-over-year thanks to falling sales and margins.

Still, keep in mind that Central once traded over $50. While I don’t think it’s going anywhere near that price, I do think the new CEO can get the stock into double digits by this time next year. If so, that would be an almost 50% return.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.

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