Three "Quant Value" stocks attempting to find a bottom: CROX. CNC. PLAY.

The following stocks are all profitable with decent margins, manageable debt, presently at good cashflow valuation, but look like they could be unfairly oversold.

CROX: Crocs stock dipped ~19% despite better-than-expected results (end Oct) due to lower HEYDUDE performance expectations and EBIT margin pressure for 2025. It has drifted lower to $95 lower since. But at 7.8x fw PE and with the stability of the CROX brand, there is a decent margin of safety while waiting for a turnaround.

Centene (CNC): CNC's reported better-than-expected financials for Q3 (in Oct) and raised the revenue outlook following a big $4.1B topline beat. However, Centene, which focuses on Medicaid,  a healthcare program jointly funded by states and the government, have come under pressure because of concerns that a future GOP administration is unlikely to raise reimbursement rates for Medicaid despite higher acuity reported from its members after a pandemic-era pause in eligibility reviews ended in 2023. Despite these uncertainties, management has unchanged their full year 2024 EPS guidance of greater than $6.80 and their view of headwinds and tailwinds. They remain confidence that have a "unique and powerful platform from which to drive long-term EPS growth to 12%-15% in a normalized environment.

FW PE is an undemanding 8.5x.

Dave and Busters (PLAY): The stock price has been challenged due to 1) declining same-store sales, partly due to shifting consumer spending patterns and reduced post-pandemic spending and, 2) inflationary pressure in the foods and beverage segment. However, they have initiated a plan to turn it around through store remodelling, digital marketing and gradual price increaess, aimed at boosting customer visits and sales. At 12.5x fw PE vs sector's 18x, although it does have a degree of debt, the rewards for a valuation rerate should they turn things around would be sizable.

Trading Note: Using the 50 DMA (blue line) as a trigger, one trading plan would be to only enter the trade when price recovers and crosses over it; and the 50 DMA can also be used as a stop loss once in the trade.

Conclusions:

All of these look like stocks that are attemping to find a bottom.

All three have different reasons why they have been sold down, with different upside and downside catalysts. However, these three cases have uncertainty in their earnings growth that have caused significant selldowns in the last few months. However, all of them are cashflow generating, at fw PEs of single digits or low double digits, a confident management and have share buyback plans going on, giving a margin of safety. All three have early signs (except PLAY, that needs to recover the 50 dma) of price momentum shifting as well, signifying a potential bottom setup.

For those studying what potential bottoming stocks look like, I would put a bookmark on these three as case studies. Study what the market thinks, the management thinks and then realities that unfold 3-6 months later. Which will work out? Which won't?

Notable mention: Bath and Body Works (BBWI).

Cheers.

Disclaimer: This post is for educational purposes only. Consult a financial advisor and determine your risk management before making any investments.