Be Wary of Spectrum Brands Stock After the Coronavirus Market Meltdown
After rallying 52% last year because of progress in its restructuring following the sale of its battery and auto care businesses, Spectrum Brands (NYSE: SPB) stock reversed course in 2020 and is down more than 36% year to date and trading at a price almost exactly where it began 2019.
The company's diversified consumer goods portfolio did pretty well during the first three months of the year, and the ongoing stay-at-home mandates could benefit it -- as they have done for other consumer staple stocks. But when Spectrum delivered its latest quarterly results last week, investors were apparently not pleased that it also withdrew its financial guidance for the year due to the uncertainty generated by the coronavirus pandemic.
Spectrum's management thinks the company is in good shape to weather this financial storm and reiterated its intention to continue paying its dividend, which currently yields 3.9% a year. I agree that it's home, personal care, and pet brands should hold up well and even get a small boost amid the lockdown. But this is no growth stock and the company's debt remains elevated. Potential investors should tread lightly.
Source Fool.com
