Avon (AVP) Appears Attractive: Invest In The Stock Now

Have you added Avon Products Inc. (NYSE:AVP) to your portfolio? If not, this could be the right time to make it part of your investment basket, as the stock appears to be a sound investment opportunity. Notably, this Zacks Rank #1 (Strong Buy) stock has witnessed a substantial jump of over 79% in the past 12 months and is currently hovering close to its 52-week high of $6.84. We note Avon’s efforts toward improving pricing, lowering costs, building brand strength and boosting Active Representatives have finally started paying off.

In an attempt to revive its business, Avon has been focused on the growth of Active Representatives. Noting significant progress on this front, the company revealed that the Active Representatives trend is on the right track, with strength seen in most of its top markets in second-quarter 2016.

Moreover, the company posted better-than-expected top- and bottom-line results in second-quarter 2016, marking a significant recovery. Results were backed by better performances in 9 of the company’s top 10 markets. Also, Active Representatives inspires optimism about the recovery of Avon’s business as it forms a key factor for the success of any direct-selling business operator.

This leading beauty company has been continually working on its long-term target of bringing down costs through a Transformation Plan, which was announced in Jan 2016. The plan is aimed at controlling Avon’s costs and investing these savings back into growth initiatives like media, IT systems and social selling.

Also, the company expects this plan to help it attain its long-term goal of delivering low double-digit operating margin and constant-dollar revenue growth in the mid-single digits. Additionally, in Mar 2016, management announced a change to its operating model that would bring in more cost savings.

Further, the plan includes streamlining of corporate infrastructure, headquarters shift to the U.K., and eliminating about 1,700 filled and 800 open positions. We believe with these actions and other supply chain and sourcing initiatives in place, the company is on track to deliver its targeted $70 million cost savings in 2016.

All the aforementioned factors make us confident that Avon is well positioned for future growth.

Stocks to Consider

Other favorably ranked stocks in the retail sector include Nu Skin Enterprises Inc. (NYSE:NUS) , American Eagle Outfitters, Inc. (NYSE:AEO) and Nordstrom Inc. (NYSE:JWN) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nu Skin, which has gained over 70% in the past one year, is currently hovering close to its 52-week high of $66.04.

American Eagle Outfitters has a long-term earnings growth rate of 11.8%. The stock has gained roughly 13.9% in the past one year.

Nordstrom, with a long-term earnings growth rate of 9.7%, has surged nearly 29.7% in the past three months.

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