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Helen of Troy Hits 52-Week High: Here Are the Factors at Play

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Helen of Troy Limited (HELE - Free Report) touched a 52-week high of $155.79, before closing the session slightly lower at $155.13 on Sep 3. The company is benefiting from strength in its Leadership Brands, along with robust online sales and core business advancements. Also, it is progressing well with its transformation plan.

Driven by these upsides, shares of the company have rallied approximately 16% in the past three months, outperforming the industry’s growth of 9.5%.

Let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Helen of Troy’s Growth Story

Helen of Troy has been focused on making solid investments in its “Leadership Brands,” which is a portfolio of market leading brands. These brands account for a significant chunk of the company’s sales. Markedly, Leadership Brands’ sales improved nearly 8.9% year over year in fiscal 2019. During the first quarter of fiscal 2020, leadership brands improved 7.4%. We note that management remains on track with investments in product launches, marketing efforts and e-commerce strategies for Leadership Brands.

The company is also benefiting from its consistent online sales and digital marketing efforts. Notably, online sales advanced 28% year over year in the first quarter of fiscal 2020 and constituted nearly 23% of the company’s top line. Management plans to make further investments in this arena, in an attempt to keep pace with the evolving consumer environment. In fact, the company is constantly augmenting its digital presence through effective marketing plans and improved content.

In addition, Helen of Troy’s Houseware unit is experiencing sturdy growth. Net sales in the segment advanced 23.6% during the first quarter, courtesy of growth in point of sale, increased distribution with brick and mortar customers, better online sales as well as innovations. Going ahead, for fiscal 2020, management expects this unit to grow in the range of 6-8%.

Apart from these, the company is on track its multi-year transformation plan. It concluded Phase I and is focused on Phase II, which is expected to drive growth for the next five years. Phase II of the plan includes continued investments in Leadership Brands, with plans to grow the same through customer-friendly innovations, international expansion and acquisitions. Also, the company aims to enhance its operating efficiency and shared service facility. Long-term goals of Helen of Troy’s transformation plan include better organic sales growth, continued margin expansion and efficient capital allocation.

Encouraged by such upsides, management raised its view for fiscal 2020, when it reported first-quarter results. Consolidated net sales are currently projected in the band of $1.590-$1.620 billion compared with previous projection of $1.580-$1.611 billion. Adjusted earnings from continuing operations are projected in the range of $8.40-$8.65 compared with the previous view of $8.25-$8.50.

We expect all aforementioned factors to continue bolstering the company’s performance, and help it remain in investors’ good books.

Other Key Picks

Estee Lauder (EL - Free Report) has a long-term earnings growth rate of 13% and a Zacks Rank #2 (Buy).

Inter Parfums, Inc. (IPAR - Free Report) delivered average positive earnings surprise of 12.1% in the trailing four quarters. It has a long-term earnings growth rate of 12.5% and a Zacks Rank #2.

MEDIFAST (MED - Free Report) , also with a Zacks Rank #2, has delivered positive earnings surprise in the trailing three quarters.

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