Avon Products Inc (AVP)

Avon reported results and the stock took a kicking. It is on his watch list. They are a leader in their field. He has to take a closer look at the debt load. It has tremendous risk.

Technicals are not looking too good. The stock is already in a downward trend and it actually broke to new lows. Momentum indicators are on the downside. This is not a good situation to be in right now. Seasonally, the stock has not performed well once you get past the beginning of May. There has to be better opportunities elsewhere.

(Market Call Minute.) This would be a Hold to Avoid. It has been a long tale story trying to get it turned around and getting distribution right. Still a bit too much hair for him.

Direct selling is a tough business. Had some management changes. If you own, she would suggest you cut your losses, and go elsewhere in the retail space.

(Market Call Minute.) This is direct selling and pretty focused on emerging markets and this is an area where she has seen weakness. Also, has some operational issues to deal with.

If you are in a Bull market, you want to own things that are participating. We only get good markets from time to time and he thinks we have entered a longer-term bull market that could go on for some time. This is a stock that is not performing in a very strong market. Revenue growth has been falling. Earnings have been falling. Consumer staples group has been one of the weakest performing groups in the market.

He goes on the cockroach theory. This company has legal issues and they have disappointed on earnings. The good news is that the stock price has come down to his model price. Close the $16.49 and his model price is $17. He would like to see it go above $18.36 to give him a sense that there is good news coming, and the stock is acting rather well. Stock is too high for him.