Hanesbrands (NYSE: HBI) certainly isn’t the flashiest stock under the sun, but it could deliver big wins for income-seeking investors. While its T-shirt business isn’t likely to drive explosive sales and earnings growth any time soon, the company pays a dividend that recently yielded over 3% and stands out as a worthwhile buy, recently trading at a forward-looking price-to-earnings (P/E) ratio around 12.
In the company’s second-quarter conference call, CEO Stephen B. Bratspies noted: “Revenue momentum continued to build across both our innerwear and activewear businesses globally. In U.S. innerwear, sales were 19% higher than second quarter 2019.” The earnings report also noted, “Compared to (pre-pandemic) second-quarter 2019, net sales from continuing operations increased $233 million, or 15%.”
The business is becoming increasingly efficient thanks to cost-cutting and efforts to prioritize Champion and other leading brands. (The company’s other brands include Bali, Bonds, Maidenform and Playtex.) Expanding e-commerce and direct-to-consumer sales should also help power earnings growth, and the company’s growth potential is underappreciated.
Hanesbrands’ annual dividend has been flat since 2017, but the company remains committed to returning cash to shareholders and has now delivered a payout regularly for 34 consecutive quarters.
Ask the Fool
Q: What are “FAANG” stocks, which I see referenced now and then? – H.B, Milton, Wisconsin
A: The acronym FAANG refers to a group of huge, high-profile technology companies with high-performing stocks: Facebook, Amazon, Apple, Netflix and (Google parent) Alphabet.
These days, the businesses are so popular and their stock market values so high – all but Netflix recently had market capitalizations of $1 trillion or more, and Apple’s was recently $2.4 trillion – that some suggest the stocks are way overpriced.
They may occasionally be overpriced, but in general, they’ve earned their values through their dominance. Consider, for example, that Facebook recently reported 2.9 billion monthly active users, and it owns Instagram as well. Amazon, meanwhile, is the world’s largest consumer-serving e-commerce company, and its Amazon Web Services is the dominant cloud-computing service; Amazon also recently employed over 1.3 million people globally.
Q: What are “vested” and “unvested” options? – C.W., Laramie, Wyoming
A: You’re “vested” when you become eligible to take ownership of an asset, benefit or payment.
Imagine that you work at Free Range Onion Company (ticker: BULBZ). You receive stock options for 100 shares of company stock, with 25% of them vesting each April 1 over the next four years. On April 1, 2022, you can exercise the option and buy 25 shares at the specified price. Every April 1, another 25 shares “vest.” On April 1, 2025, you’ll be “fully vested” and can buy all 100 shares (or any shares you haven’t bought yet) – if you want to. (You may have only a few years before your options expire.)
Companies use vesting schedules to motivate workers to stick around. Learn more at myStockOptions.com and at NCEO.org (under “What Is Employee Ownership?”).
My dumbest investment
One of my dumbest investments is especially embarrassing. I wanted to buy shares of Blueprint Medicines, and I bought shares of Bluebird Bio instead.
Both are in the biotechnology sphere. Blueprint’s ticker symbol is BPMC, and Bluebird’s is BLUE. I must have started typing in the name Blueprint when I was placing my order with my brokerage, when the interface suggested Bluebird – and I just clicked OK, assuming that was right.
It’s dumb on so many levels: For example, there are other companies that start with Blue, such as Blue Apron Holdings, Blue Sphere Corporation, BlueLinx Holdings, Blue Owl Capital and more – why would I assume the first “blue” company that pops up is the right one? – S.M., Aurora, Colorado
The Fool responds: You’re not alone having made this kind of blunder. Some investors, thinking they were getting Intel (INTC), instead bought World Fuel Services Corporation (INT). Some have bought into Micron Solutions (MICR) instead of Microsoft (MSFT), or iStar (STAR) instead of Starbucks (SBUX).
It’s worth reading up on all kinds of mistakes investors commonly make so that you’ll have a greater chance of avoiding them. This wrong-ticker blunder should help you remember to double-check ticker symbols when placing trading orders.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.