Shares of iconic plasticware maker Tupperware Brands (TUP -5.10%) jumped 10.5% in roughly the first half-hour of trading on Tuesday. By 10:30 a.m. EDT today, the shares had already given back some of that gain, but were still sitting with a 7% advance. Stepping back, however, provides a little perspective: Tupperware's stock is up roughly 200% so far in 2020. For reference, the S&P 500 Index is only up about 6% over that same span.
The news that appears to have incited even more enthusiasm for Tupperware than there already was today is tied to a new analyst call on the stock. Initiating coverage with a buy rating and a $30 price target, D.A. Davidson analyst Linda Bolton Weiser gave an upbeat view of the future for the company. Notably, the outlook is buttressed by management successfully pivoting to digital sales during the COVID-19 pandemic and company projections for 7% revenue growth and more than 40% EBITDA growth in 2021.
But there has been a lot of good news priced into Tupperware shares already so far in 2020, noting the big year-to-date price gain. And even that number doesn't do full justice to the situation. Over the past six months, the stock has advanced from around $2 a share to roughly $25 more recently, an astronomical advance. Over the past three months, it is up more than 400% while the broader market is up just 12%.
This is not meant to suggest that good things aren't taking shape at Tupperware, only that investors already appear to be keenly aware of the positives and, perhaps, willfully ignoring the negatives (such as a heavy debt load).
When Wall Street is upbeat on a stock, there can be a rush of investors and analysts offering images of a glowing future. Tupperware's forward P/E sits at around 13 times, which is hardly excessive. But after such a massive run in such a short time based on a turnaround story that is still unfolding, long-term investors should take any positive review of the future with a grain of salt. Emotions can and do change very quickly on Wall Street. Tupperware is worth a closer look, but tread with caution just in case.