Hanesbrands Inc (NYSE:HBI) makes underwear and activewear, two of the most stable businesses in retail. Yet, HBI stock lost nearly one-third of its value in 2016.
HBI is expected to grow revenue 8% this year as it continues to gain market share.
Given the stability of its business, and its growth, one might wonder why HBI stock has fallen 28% over the last year? It’s a good question. The answer is that Hanes’s valuation got ahead of itself, and HBI stock corrected after years of strong performance. Don’t forget, HBI stock is still higher by 300% over the last five years despite last year’s collapse.
With HBI stock trading at 10x forward earnings and paying a 2% yield, I expect investors to flock towards HBI stock in 2017.
Stock laggards to buy: PMTS -61%
CPI Card Group Inc (NASDAQ:PMTS) is a small $230 million company, but has a very mature business. PMTS operates in the payment card production industry, including credit, debit, and prepaid debit cards with or without EMV chips.
The company estimates a 35% market share of all cards in the United States with a diverse set of over 4,000 direct and indirect customers. This includes many of the largest North American issuers of debit and credit cards such as JPMorgan Chase, Bank of America, and Wells Fargo. Therefore, PMTS is not going to create massive year-over-year growth, but its also a company that should not see 60% of its valuation wiped out in any given year.
With a dividend yield of 4.3% and trading at less than 9x forward earnings, PMTS stock looks poised for a turnaround year.