Over the last year, the Qurate brands have suffered primarily due to supply chain issues, as the company struggled to source the best-selling items for the QVC and HSN shopping networks. Earnings have declined, and the common stock share price is down 75% over the last year.
Qurate has made significant new leadership hires and restructured its supply chain with a solid plan to return to profitable growth.
My Top Pick for aggressive investors in 2023 is Qurate Retail, Inc. 8.0% Fixed Rate Cumulative Redeemable Preferred (QRTEP). These shares have a par value of $100 per share and pay a $2.00 quarterly dividend. From the September 2020 IPO until January 2022, QRTEP traded close to $100.
As we moved into 2022, rising interest rates pushed preferred stock values down — the iShares Preferred and Income Securities ETF (PFF), a widely tracked preferred shares fund often used as a sort of index for preferreds, is down 19% this year.
I also believe that investors and traders did not differentiate between QRTEA, the common shares, and QRTEP, the preferred shares. As a result, the QRTEP share price dropped from $103 in January to around $40 at the end of the year.
Now we get to the good stuff:
* QRTEP continues to pay its $2.00 quarterly dividend as preferred stock, giving the shares a current yield of 20%.
* QRTEP has a mandatory redemption of $100 per share no later than March 15, 2031.
If Qurate does not go bankrupt, QRTEP has a locked-in return of $100 in eight years, plus $64 per share in dividends over those years. A $40 investment now will return $164 per share during that period. The math works out to an 18% compound annual return which you will earn, or your investment will go to zero. I like the odds.