Transformation Capital: September a Volatile Period for Markets

Transformation Capital reported that September represented a generally volatile period for the markets as a whole.

According to the investment banking and business development firm, members of its direct selling tracking set were not immune to the action within the broader indices. Generally speaking, the larger capitalization stocks were flat, to slightly down during the month, with a few notable exceptions. Among small-cap stocks, a number of recent leaders pulled back off of recent highs.

As a whole, the Transformation Capital Direct Selling Index (TDSI) declined 4.43% over the course of September compared to a decline of 2.28% for the Dow Jones Industrial Average (DJIA). However, the TDSI remains up 44.17% since February 28, 2020, as compared to a gain of 9.34% for the Dow.

Large-Cap Stocks

Tupperware moved up to Transformation Capital’s large-cap tracking set this month as the Company rose an additional 24% over the course of the period and now possesses a market capitalization of ~$1 billion, which is the minimum requirement for inclusion in the large-cap list.

  • Tupperware Brands Corporation (NYSE: TUP) now stands more than 600% above its February 2020 closing price based on positive trends across its business driven by new management and a pandemic-oriented trend towards at-home food preparation and storage.
  • Nu Skin Enterprises, Inc. (NYSE: NUS) advanced an additional 6% and now stands 107% above its pre-pandemic levels. After the market closed on October 1, Nu Skin announced revenue results for the third quarter of 2020 that were nearly $100 million ahead of the low end of the Company’s previously issued guidance range.  As a result, the stock rallied approximately 10% on October 2 on trade nearly 3X average.
  • Other interesting notes include Primerica, Inc. (NYSE: PRI), which our research indicates is significantly outperforming its insurance and financial services peers.

 

Small-Cap Stocks

The small-cap stocks among Transformation Capital’s tracking set showed some weakness over the course of the month, but much of that was within stocks that have advanced significantly over the course of the last several months.

  • Natural Health Trends Corp (NASDAQ: NHTC) rose more than 20% between September 11 and September 14, on heavy trade, before settling into a gain of 8.25% for the period.
  • Sharing Services Global Corporation (OTC: SHRG) fell 47% during the period but remains 525% above its February 2020 closing price.

 

Looking Ahead

According to Transformation Capital, September continued the consolidating action generally seen among its direct selling tracking set since August.

“We believe this consolidation is a prelude to an exceptionally strong end to what has proved to be a phenomenal year across the channel,” said Stuart Johnson, CEO of Transformation Capital. “We continue to believe that 2020 remains on track to surpass 2016’s record domestic direct selling revenue and our short to mid-term thesis remains unchanged. Our belief is that the industry will continue to perform well financially and outperform the major indices for the foreseeable future.”