Are you looking for the “next” GameStop (NYSE:GME) stock or AMC Entertainment (NYSE:AMC) stock? That’s already a misguided mindset, and it’s even worse if you’re focused on a troubled business like Tupperware Brands (NYSE:TUP). The last thing you need is a toxic asset in your portfolio, so don’t try to come up with any “bright ideas” about Tupperware stock.
I’m old enough to remember when people would host “Tupperware parties” to sell Tupperware Brands from their homes. Those days are long gone, as it’s easy enough to buy food-storage containers online nowadays. Nevertheless, some eager investors might decide to take a chance on Tupperware – but that idea is as stinky as old, leftover food in the summer.
Tupperware Gets a Meme-Stock Boost
As InvestorPlace contributor Josh Enomoto concisely summarized, Tupperware stock got a mid-May boost “on no company-specific news.” The shares zoomed 42% higher simply due to a revival of the meme-stock trend.
Louis Navellier provided an excellent refresher on how the short squeeze in GameStop stock and AMC Entertainment stock played out. Meme-stock guru “Roaring Kitty” resurfaced on social media, leading to a resurgence of certain speculative stocks.
Tupperware stock is still a highly risky penny stock (meaning, it trades below $5 per share). Alarmingly, the company was late in filing its 2023 Form 10-K annual report due, in part, to “ongoing material weaknesses in internal control over financial reporting.” Tupperware Brands also reported “significant attrition” in its accounting department “resulting in resource and skill set gaps, strained resources, and a loss of continuity of knowledge.”
Tupperware’s Financial Failures
Tupperware Brands isn’t known for being timely with its required filings. Consequently, it’s hard to get a recent reading on the company’s financials. However, at least we can refer to a quarterly Form 10-Q for the 13 weeks ending on July 1, 2023.
Tupperware’s net sales and gross profit declined year-over-year, but that’s not too surprising. What’s more unsettling is that Tupperware Brands swung to a net earnings loss of $29.8 million, from net income of $8.3 million in the comparable 13-week period of 2023.
In a time of “sticky” inflation and convenient access to a wide variety of online products, it’s hard to envision Tupperware Brands thriving now. But then, a company certainly won’t thrive if it can’t even survive.
In the aforementioned Form 10-Q filing, Tupperware Brands raised “substantial doubt about its ability to continue as a going concern.” This doubt extends for “at least one year from the issuance date of these financial statements.”
At this point, it’s difficult to envision a meaningful turnaround for Tupperware Brands. According to Fortune, “[C]ompetition in the plastic storage container business has increased dramatically.” Tupperware’s competitors offer “products at substantially lower prices,” so it’s unclear how the company will recover.
Tupperware Stock Is Extremely Vulnerable Now
Just the words “going concern” should tell you everything you need to know about Tupperware Brands, financially speaking. Moreover, accounting-department issues add to the uncertainty and doubt surrounding Tupperware.
Therefore, Tupperware stock is vulnerable to a drawdown after the meme-stock rally. Tupperware Brands, while once an iconic and thriving company, is now a business in decline. The prudent policy, then, is to find a more promising and less problematic consumer-goods company to invest in.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
