Charming Shoppes also suffers from poor merchandising and found itself stuck with too much inventory, which the company is addressing. Furthermore, Charming Shoppes is going to have to focus on its private label credit card program which is experiencing declining revenues and returns. This company is now on the hands of a new chief operating officer, and the board is conducting a search for a new chief executive officer.
All of these problems, especially the merchandising issues, will take some time to fix. I am not saying that all three of these stocks will rebound in 2010, but, as a group, I am expecting a rebound. If you were to play this theme, I would do so as a package of all three names, a field bet of sorts.
Talbots is a major holding of
Trafelet Capital Management
, as of the most recent reporting period, and
Robert Rodriguez of FPA Capital
has a position in Charming Shoppes.
One stock that I didn't include as one of my
health care stocks to consider
(MDT - Get Report)
, which manufactures and distributes medical devices and equipment. In 2010, the company faced some issues of concern for shareholders.
Medtronic, which has been fighting the FDA over approval of a new medical device, the CoreValve System, received some good news recently from the regulatory agency. The FDA granted conditional approval to Medtronic for a revised design trial study.
Chairman and CEO William Hawkins is expected to retire in April, and the board has initiated a search for his replacement. No reason was given for his decision.
In addition, the company completed the takeover of blood pressure treatment company Ardian earlier this month. The acquisition is expected to be dilutive by 2 cents in its fiscal fourth quarter ending April 2011 and by 5 cents to 6 cents in fiscal 2012.
All of these issues weighed on the stock in 2010, which ended the year down nearly 16%. But as 2011 unfolds, I see the potential for a stock rebound. Medtronic's products will be in ever-increasing demand as baby boomers -- and our population in general -- age. For its fiscal year ended April 2011, earnings are expected to grow by 5%. In the following year, earnings should grow by about 7%. The stock pays a dividend of 2.5%. The balance sheet isn't great, but it's good, with long-term debt of about $10.55 billion only partially offset by cash and short-term investments of about $3.54 billion and long-term investments of about $5.45 billion.