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Why Tupperware may be the latest ‘meme stock’
It was only a few months ago that Tupperware‘s stock went tumbling after the 77-year-old company warned it could collapse if it couldn’t raise new financing.
Fast-forward to this past week, and the company’s shares were on a tear.
Analysts have likened Tupperware’s recent surge to viral rallies in so-called “meme stocks” such as Bed Bath & Beyond, Revlon, Hertz, GameStop and AMC.
“What’s going on in the stock market with Tupperware is very different from what’s happening from Tupperware’s business fundamentals,” said Stephen Foerster, a finance professor at Western University’s Ivey Business School.
“This has all the hallmarks of a classic meme stock.”
Tupperware shares got an added boost Friday after finalizing a debt restructuring deal.
Everyday investors looking into stocks like Tupperware must know they carry a “tremendous risk” because there’s “so much volatility,” Foerster said.
Read more about what’s behind the latest meme stock rally.
What is a ‘richcession’ — and are we in one?
Canada has managed to skirt a technical recession — often defined as two straight quarters of negative GDP growth — despite months of warnings one was looming.
But the country may be facing another type of downturn: a “richcession.”
“A ‘richcession’ occurs when the wealthy get hit more than usual. And this is uncommon because normally in a recession, we see low-income households and, to an extent, the middle class hurting a lot more, whereas for the wealthy it is just a minor inconvenience,” Tu Nguyen, economist and ESG director at RSM Canada, told Global News.
Ted Mallett, director of economic forecasting at the Conference Board of Canada, said all recessions usually have some sectors that tend to do worse than others, but noted the pendulum might be swinging in the other direction.
“For example, the pandemic had a severe effect on the service class of workers as restaurants and retail establishments were closed down. A lot of workers that tended to be in the lower income categories were laid off and therefore had to be supported by other government measures,” he said.
Nguyen points out that “a lot of government support has poured out and is really helping a lot of low-income families to pay off debt, to sack away some savings.”
And, she said, workers in higher-paying fields have been dealing with the brunt of the recent job losses.
Learn more about “richcessions” and traditional recession risks in Canada.
Did company profits fuel inflation?
Company profits are not to blame for the high inflation Canadians have been experiencing over the last couple of years, a Bank of Canada analysis suggests.
Researchers with the central bank said in a report released Tuesday that data they studied across a number of sectors showed that the contribution of changes in corporate markups to inflation was limited.
After peaking at 8.1 per cent in June 2022, overall inflation fell to 2.8 per cent last month – within the Bank of Canada’s target range – but some metrics, like food sold at grocery stores, remain elevated.
Big grocers have defended themselves against “greedflation” claims as they continually posted profits as inflation soared. Companies like Loblaw have placed the blame for higher-priced products on increased costs from global suppliers.
The Bank of Canada researchers found the average growth rate of company markups to be highest in the manufacturing sector (22 per cent) and lowest in the agriculture sector (2.2 per cent) over those four years.
“We find that firms’ measured markups did grow after the onset of the COVID-19 pandemic,” the report said.
“However, our results do not indicate that this markup growth was inflationary. Most of the growth in markups occurred during 2020, a year characterized by low inflation.”
Read more about what the Bank of Canada analysts found.
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– THE QUESTION –
“Inflation has me worried about my investment yields. Where’s the best place to put my money as a safe haven? I have most of my investments in mutual funds, but the returns are feeling stagnant.”
— A Money123 reader
“Assuming no near-term spending or liquidity needs, I would invest my money in a basket of stocks of high-quality companies. Such companies tend to have recession-proof revenue streams and can/have raised prices to offset inflationary pressures. This can be accomplished in a low-cost way by purchasing ETFs from reputable issuers such as the RBC iShares MSCI Canadian Quality Dividend ETF (Ticker: XDIV).”
– Ernest Wong, head of research and portfolio manager, Baskin Wealth
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