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there's a price for everything at least in the stock market sooner or later beaten-down stocks become investable again as long as the underlying company isn't going out of business and the balance sheet is good just look at the incredible action today in Bed Bath and Beyond for years this HomeGoods chain was an absolute dog thanks to ferocious competition from Amazon and better run brick-and-mortar wheat rivals especially Target it's hemorrhage markets here comfy seat aimless wasting billions of dollars on useless buybacks as management repeatedly failed to commit to a real turnaround strategy bed bass the poster child for how a class executives can drive a previously good business right into the ground stock peaked around $80 a few years ago yesterday it closed at nine dollars and change but here's a shocker the company's still profitable it's got more than 1500 stores and an OK balance sheet bed Beth just needed direction and that's what it got last night when the board poached none other than targets chief merchandising luster marks written and named him the new CEO what a get in response to stock search one of the 21% today I think getting move actually made perfect sense Bed Bath have been beaten down to the point where was too cheap to ignore the stock was like a coiled spring especially giving you manga short position going into the session so is this thing finally bottoms we need to be careful here people have lost fortunes speculating on a Bed Bath and Beyond turn around now I've been warning you away from this stock for ages but you know what you know what I think it's time to go positive on this one ok so you missed you missed a couple of smackers today listen to me Bed Bath been punished enough now that they've got a competent CEO better than that a great CEO coming in I'm thinking the stock has not just a little more but a lot more upside what makes you say that ok back in the airport trio of activist hedge funds got involved here region partners miss selim advisors and in core advisors I know miss Ellen John dusky known for 30 years she spoke with my corporate governments content conference in the spring about the need to change things and these guys had bold plans to turn things around in a strong track record but at the same time I told you bed bath was still too toxic to touch no matter what even when the activists effectively won their proxy contest may I'll sing the old co-chairman then now former CEO Steve two mares I still said no no no this stock is a sell sure enough the stock spiked up to $19 and change when those activists got involved and then I proceeded to lose more than half its value even though there was some reason there were to expect the term Bed Bath reported hideous quarter in June and investors started worrying that they might get slammed again by the trade war by mid-august the stock in plunge to seven dollars and change but if this level is it was selling for just five times earnings and that is ridiculously cheap remember this company's profitable it's cheap unless you convince the axle owners are going to be much much worse going forward and man even in the low double digits weirdness today I've gotta tell you this is a very different story right now Bed Bath sells for six point four times this year's that's an incredible bargain if you think the company will come even close to me numbers at these levels you have to stop fretting about what can go wrong you got to start imagining about what can go right and it's frankly not that hard to imagine not anymore the last couple weeks bed bass had two major positive developments had been completely overlooked makes me feel more confident about recommending this as a special situation now you already knew I've told you about the new CEO they picked last time I'm gonna give me more on him in a minute before then nope bet Beth had already started to turn okay stock didn't lie here see last Wednesday the cup reporters a seemingly hideous quarter looked very ugly on the surface however when you drill down I felt there were a number of positives while back Beth's revenue came in we couldn't expect it in the same store sales were absolute disasters shrinking by 6.7 percent which is just awful when the analyst only expected a 5.4 percent decline there was a major silver light the company earned 34 cents a share that was substantially better than the 27 cents of Wall Street was looking for guidance similar imagine cut their full year earnings forecast bad but the numbers were still substantially better than what the animals for modeling good the Bulls were upping bed basswood announced their new CEO though and when that didn't happen well the stock got hammered people said you know what nobody wants this job which brings us to last night that bath desperately needed a permanent CEO that investors can trust you know what I can't actually imagine a better pic that marked written targets chief merchandising officer who takes over November 4th targets one of the few retailers that's been able to thrive in this environment well that's why I made it part of my acronym called watch which is Walmart Amazon Target Costco and Home Depot even though it's the smallest of these companies by far if you look at their socks you will know that they've just rallied throughout this whole period of turmoil other than Amazon target's been bed bass worst enemy but now they've got one of tarnis best executives running the show what's Tritton got at Target he was a major player in rolling out their highly successful omni-channel operation and it's huge he turned around targets private label business fabulous oh and he's been responsible for keeping target suppliers in line major reason why they haven't really been hurt by the tariffs once he takes over next month Trenton's needs to do the same thing for bid death while also improving their merchandised assortments and cleaning up the cabin structure there's a reason why he was shortlisted from day one Bed Bath wants to make itself relevant again and he's the guy to do it why am I so confident because we've learned the trick Minh wanted to be paid in stock as a key part of his compensation package rather than getting a big signing bonus he's betting on himself I want to bet with him and looked rings not crazy even though he never would have taken this job if you believe the bed bath was lost cause I think the fundamentals are better than most people seem to appreciate there were some genuine positives in that last quarter all in the conference call Bed Bath pointed out that they've saved hundreds of millions of dollars by improving their business mostly American sourcing model that's why I'm not worried about the tariffs the company is already fixing the ridiculously inefficient supply chain and they won't have to have to raise prices to you if the tariffs ramp next week they're also planning to sell off some of these smaller businesses that really cluttered the joint and they're gonna not touch some of the real estate management wouldn't put a specific number on it but I bet it could be somewhere in the neighborhood of a billion dollars that's a big deal why cuz big base 20 billion dollar company oh and they already have about a billion dollars to cash the balance sheet best of all it appears that that best sales for the current quarter have improved versus the quarter they just reported company only needs to stem the bleeding a little to make the numbers we're talking down 4% same store sales rather than down 6 plus they took a 200 million dollar charge for inventory and they're planning to remove 350 million dollars of inventory stale inventory from their stores before the holidays that means this course will be clean what does that ever make make a big difference very few clear inside of us dragging down their gross margins I'm expecting a major pickup in full price sales and look even if the estimates need to be cut even if they can only say make a buck 50 instead of the $2 people are looking for the stock would still be absurdly cheap at 8 times earnings bottom line here and this is really important people Bed Bath is back they finally brought in a hyper competent CEO and even after the stocks of monster run twenty one percent today I think it's got a lot more upside in a major change for me and mad money I would buy some of the stock here and then if you get a pullback you know what turn around to take a little time I would definitely buy more BBB why who - stupid [
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