Per: Motley Fool article of 1/8/17
These 3 companies could be bought in 2017
GNC Holdings
GNC Holdings lost 64% of its value in 2016, marking its worst full-year performance since its IPO in 2011. The nutritional-supplements retailer was crushed by competition from superstores such as Wal-Mart, warehouse retailers such as Costco, and e-tailers such as Amazon.com. Investigations regarding the efficacy of some of its supplements also exacerbated that decline.
GNC's sales have fallen year over year for three straight quarters, and analysts expect its sales and earnings to respectively fall 4% and 16% this year. That losing streak is expected to continue with an average annual earnings decline of 7% over the next five years. GNC is trying to make a comeback with a pricey Super Bowl ad campaign in February, but analysts have questioned the impact of that eleventh-hour effort.
Those factors seemingly make GNC an awful investment for 2017, but its trailing P/E of 4 and price-to-sales ratio of 0.3 are becoming too cheap for potential suitors to ignore. Chinese investors were reportedly thinking about buying GNC last October, but those talks have reportedly stalled. Private-equity firms could also still acquire the company, which remains the largest health- and nutritional-supplements retailer in the United States. Those suitors might cause the stock to surge, but it could also plummet if buyers fail to emerge.
These 3 companies could be bought in 2017
GNC Holdings
GNC Holdings lost 64% of its value in 2016, marking its worst full-year performance since its IPO in 2011. The nutritional-supplements retailer was crushed by competition from superstores such as Wal-Mart, warehouse retailers such as Costco, and e-tailers such as Amazon.com. Investigations regarding the efficacy of some of its supplements also exacerbated that decline.
GNC's sales have fallen year over year for three straight quarters, and analysts expect its sales and earnings to respectively fall 4% and 16% this year. That losing streak is expected to continue with an average annual earnings decline of 7% over the next five years. GNC is trying to make a comeback with a pricey Super Bowl ad campaign in February, but analysts have questioned the impact of that eleventh-hour effort.
Those factors seemingly make GNC an awful investment for 2017, but its trailing P/E of 4 and price-to-sales ratio of 0.3 are becoming too cheap for potential suitors to ignore. Chinese investors were reportedly thinking about buying GNC last October, but those talks have reportedly stalled. Private-equity firms could also still acquire the company, which remains the largest health- and nutritional-supplements retailer in the United States. Those suitors might cause the stock to surge, but it could also plummet if buyers fail to emerge.