The short rec came from Stephen Leeb ("The Complete Investor"). His stock picks are a mixed bag but he's got a decent track record on his short positions. Here's the complete text of his discussion of HELE:
"Helen of Troy, our second new short, epitomizes another kind of value trap: a company whose low P/E may make it appear undervalued but that keeps missing its growth targets. Earnings have consistently come in below management�s guidance, a sign either that the company has problems outside management�s control or, even worse, that management doesn�t see or understand the problems it faces.
"The company makes hair dryers, curling irons, and other personal care products. Management attributes its earnings decline mainly to lower personal care sales (an arena in which it competes with the likes of Procter & Gamble) and higher expenses as well as a challenging consumer environment.
"It�s true that higher oil prices have dampened consumer spending. But we think the company�s problems run deeper. For one thing, the market for its various hair care and other products is a mature one, especially given that Helen of Troy operates mainly within the U.S., meaning its sources of future growth are very limited. For another, it�s trying to market several competing brands of the same kinds of products at the same time, always a tricky prospect. In addition, its products are sold largely through mass retailers�Wal-Mart is its biggest customer, accounting for about 20 percent of sales�and are priced as commodities.
"The company may try to continue to aggressively acquire other brands and even companies. If so, its stock price is likely to suffer. And if earnings continue to shrink, the stock price will suffer even more. In sum, while at its current P/E the stock may seem like a bargain, it isn�t, and we advise selling Helen of Troy short."