Dress Up Your Portfolio With Party City

David Fried is a specialist in companies that are repuchasing their shares; the portfolio in The Buyback Letter have beaten the S&P 500 by more than 132% since its inception back in 2000. Here's one of his new buys.

Party City Holdco (PRTY) is the leading party goods retailer in North America — a popular one-stop shopping destination for party supplies, balloons, and costumes -- and the largest vertically integrated supplier of decorated party goods globally.

It designs, manufactures, sources and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery throughout the world through some 950 specialty retail party supply stores (including franchise stores) operating under the names Party City and Halloween City, and e-commerce websites, principally through its website.

PRTY has opened more than 50 temporary Toy City pop-up store locations throughout the U.S. in anticipation of the holiday gift-giving season, joining the fray of other retailers fighting to grab a chunk of the toy market after Toys R Us went bust.

Party City underperformed in Q3, with a loss of $2.4 million (after reporting a profit in the same period a year earlier), due to “operational disruptions, inflationary pressure, helium shortages and lower-than-expected sales.” Revenue was $553 million in the period, which didn’t meet Street forecasts of $591.8 million.

Party City expects full-year earnings in the range of $1.60-$1.65 per share, with revenue in the range of $2.43-$2.46 billion. Party City Holdco has a ROE of 22%, based on the last 12 months, and a recent market cap of nearly $1 billion. It went public in 2015.

No matter what, though, it pays to remember that people continue to spend money on all sorts of events, from birthdays and holidays to weddings and other special occasions, during good and bad times. Shares outstanding have been reduced by a whopping 18.837% in the last 12 months.

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