NEW YORK (TheStreet) -- Oil prices have rebounded some 20% to above $60 from about $52 per barrel, since we last discussed UniFirst (UNF), which is due to report fiscal third-quarter earnings Wednesday before the opening bell.
Investors looking for a solid turnaround candidate that is trading at a relatively cheap price for the second half this year should pay close attention to what UniFirst will say Wednesday about its outlook for the rest of the year.
Although no one can say with certainty what direction oil prices will take next, it is nonetheless encouraging as it appears that the market has already seen the worst. And this makes UniFirst's stock an interesting play because its customers can now get back to normal or as close to fully operational as possible.
The more money its customers can spend the more revenue and profits UniFirst will generate.
Shares of UniFirst, which supplies and services uniforms and work wear to various industries, have been under pressure all year, falling some 5%. The shares are also down more than 1% in the past six months, against 2% gains for the S&P 500 (SPX) index during that span, which makes UniFirst's stock even more attractive.
Not only are the shares trading at just 18 times earnings, against a price-earnings ratio of 21 for the S&P 500, but the stock has an average analyst 12-month price target of $128, suggesting 11% gains from this level of about $115.