While yesterday's 10% move in the Dow brought was sigh of relief to many investors, the flotsam and jetsam (aka deep value) is not yet participating. That means that there are a lot of bargains out there, but you still have to be very cautious, and very patient.
Let's face it, retailers are struggling to put it mildly, and this will likely continue at least until the panic menatlity subsides. But we are seeing some interesting situations in retail.
AC Moore
AC Moore (ACMR)is a Berlin, NJ arts and crafts superstore, with 136 locations on the east coast. Currently trading at $2.88, shares have been pounded this year, and are off 83% from the 52 week high. Sound familiar?
This company has also recently joined the ranks of the net/nets, the downtrodden companies we love so much here at Cheap Stocks. We are familiar with the store and concept having used their framing services in the past, (and Mrs. Cheap Stocks has been a frequent visitor to our local store).
While we are not wearing rose colored glasses believing that retail will recover quickly, we like the AC Moore story, because they appear to have the resources to weather this storm. With $45 million in cash and just $20 million in debt, ACMR has burned through $8 million in cash during the trailing 12 months. (A prolonged recession will likely increase the burn rate)
With a current enterprise value of juat $36 million, this company is priced for the scrap heap. Could it ultimately be headed there? Anything is possible. But the concept of these stores is fairly unique (call it a poor-man's Michael's), and it generates 25% of sales from art and scrapbooking (I don't get the whole scrapbooking craze, but that doesen't make it any less real).
I don't like the fact that all AC Moore stores are leased, and that the company does not own its real estate, but still find this a potentially interesting opportunity.
AC Moore
Ticker: ACMR
Price: $2.88
Market Cap: $59 million
Net Current Asset Value(NCAV): $92.5 million
Cash: $45.6 million
Cash/share: $2.25
Net Cash/share: $1.24
Price/Book: .3
*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
Wednesday, October 29, 2008
Saturday, October 25, 2008
Armageddon?
It certainly may feel that way in this panic driven market, and your portfolio may be reflecting doomsday, but we will recover. If you are a forced seller, however, the losses are very real.
Of course, the list of net/nets grows by the day, and some of the names have never graced our list. Here's a sample of some of the new net/nets:
Ingram Micro
Ticker: IM
Price: $12.72
Market Cap: $2.11 billion
NCAV: $2.36 billion
Cash: $807 million
P/E: 7
Benchmark Electronics
Ticker: BHE
Price: $9.28
Market Cap: $617 million
NCAV: $761.4 million
Cash: $288 million
P/E: 7.5
Tuesday Morning
Ticker: TUES
Price:$1.75
Market Cap: $73 million
NCAV: $152 million
Cash: $8.6 million
P/E: 5
As always, buyer beware, especially in this market. "Cheap" stocks are often that way for very good reasons, and if conditions persist in the current environment, the fine line between "cheap" and bankruptcy will reveal itself.
Cheap Stocks Premium Content
Our subscriber list now tops 600, and while we will continue to provide some free content, we are considering offering a premium subscription service. This would entail a deeper, more detailed dive into the research topics we currently provide, and would be offered to a limited number of subscribers.
Before taking the next steps, we'd like to gauge interest in a premium subscription service. Please email us @ cheapstocks@verizon.net if you'd be interested .
*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
It certainly may feel that way in this panic driven market, and your portfolio may be reflecting doomsday, but we will recover. If you are a forced seller, however, the losses are very real.
Of course, the list of net/nets grows by the day, and some of the names have never graced our list. Here's a sample of some of the new net/nets:
Ingram Micro
Ticker: IM
Price: $12.72
Market Cap: $2.11 billion
NCAV: $2.36 billion
Cash: $807 million
P/E: 7
Benchmark Electronics
Ticker: BHE
Price: $9.28
Market Cap: $617 million
NCAV: $761.4 million
Cash: $288 million
P/E: 7.5
Tuesday Morning
Ticker: TUES
Price:$1.75
Market Cap: $73 million
NCAV: $152 million
Cash: $8.6 million
P/E: 5
As always, buyer beware, especially in this market. "Cheap" stocks are often that way for very good reasons, and if conditions persist in the current environment, the fine line between "cheap" and bankruptcy will reveal itself.
Cheap Stocks Premium Content
Our subscriber list now tops 600, and while we will continue to provide some free content, we are considering offering a premium subscription service. This would entail a deeper, more detailed dive into the research topics we currently provide, and would be offered to a limited number of subscribers.
Before taking the next steps, we'd like to gauge interest in a premium subscription service. Please email us @ cheapstocks@verizon.net if you'd be interested .
*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
Saturday, October 11, 2008
No Safe Havens, but Plenty of Bargains...if you have the Stomach for it....
How do you describe the markets the past two weeks? Did it feel like 1987 all over again? Not really, if only because in 87, as violent as it was, the crash was primarily over in one day. It was like ripping a band-aid off of a cut. Painful, but quick. This time around, it's been more like an endless root canal. Just when you think it may be over, the dentist is back for more.
CS21 Net Net Index Hit Hard
Our index of 21 companies trading below their net curent asset value has been hit extremely hard this past month. Since inception (2/12/08) through 9/16, the index was up 15%, 2000bps above the Russell Microcap Index. As of Friday, it was down 17.5% since inception. During the same period, the Russell Nicrocap Index is down about 30%, so our little index of misfits is still holding up well in that comparison. Quite a drubbing, though.
But the smallest of the small are being hit extremely hard in this market, and there may be bargains galore. The problem is, no one knows when the panic will subside, and panic knows nothing about assets, book values or cash. Panic only knows panic.
Still, we've seen tremedous pullbacks in some intersting names. Here are a handful that we still own, that look even more interesting at current levels. Please note, none of these are net/nets
PICO Holdings(PICO)
Price: $28.99
Off 52 week High: 40%
Cresud ADR(CRESY)
Price: 6.97
Off 52 week High: 73%
JG Boswell(BWEL)
Price: $550
Off 52 week High: 45%
Premier Exhibitions(PRXI)
Price: $1.26
Off 52 week High: 91.5%
I don't know if we've hit bottom yet, it "feels" like we are close, but again there are no rational bounds during a panic. There's plenty of cash on the sidelines, though. Ultimately, some of it will find it's way back into the market. In the meantime, be careful.
*The author has a positions in all companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
How do you describe the markets the past two weeks? Did it feel like 1987 all over again? Not really, if only because in 87, as violent as it was, the crash was primarily over in one day. It was like ripping a band-aid off of a cut. Painful, but quick. This time around, it's been more like an endless root canal. Just when you think it may be over, the dentist is back for more.
CS21 Net Net Index Hit Hard
Our index of 21 companies trading below their net curent asset value has been hit extremely hard this past month. Since inception (2/12/08) through 9/16, the index was up 15%, 2000bps above the Russell Microcap Index. As of Friday, it was down 17.5% since inception. During the same period, the Russell Nicrocap Index is down about 30%, so our little index of misfits is still holding up well in that comparison. Quite a drubbing, though.
But the smallest of the small are being hit extremely hard in this market, and there may be bargains galore. The problem is, no one knows when the panic will subside, and panic knows nothing about assets, book values or cash. Panic only knows panic.
Still, we've seen tremedous pullbacks in some intersting names. Here are a handful that we still own, that look even more interesting at current levels. Please note, none of these are net/nets
PICO Holdings(PICO)
Price: $28.99
Off 52 week High: 40%
Cresud ADR(CRESY)
Price: 6.97
Off 52 week High: 73%
JG Boswell(BWEL)
Price: $550
Off 52 week High: 45%
Premier Exhibitions(PRXI)
Price: $1.26
Off 52 week High: 91.5%
I don't know if we've hit bottom yet, it "feels" like we are close, but again there are no rational bounds during a panic. There's plenty of cash on the sidelines, though. Ultimately, some of it will find it's way back into the market. In the meantime, be careful.
*The author has a positions in all companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
Thursday, October 02, 2008
Cheap Stocks Random Note: New Net/Net
Widely swinging markets typically reveal new net/nets, and a "bigger" player- (not saying much in net/net land)- among the biggest we've seen in the past decade, just hit the radar.
Tech Data
Ticker: TECD
Price: $28.8
NCAV: $1.639 billion
Market Cap: $1.45 billion
Cash $468 million
Total Debt: $422 million
P/E: 10.7
This Clearwater Florida based company distributes hardware, software and networking equipment, and provides services such as training and technical support.
As always, do your own homework before taking a position in any company.
*The author does not have a position in Tech Data. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
Widely swinging markets typically reveal new net/nets, and a "bigger" player- (not saying much in net/net land)- among the biggest we've seen in the past decade, just hit the radar.
Tech Data
Ticker: TECD
Price: $28.8
NCAV: $1.639 billion
Market Cap: $1.45 billion
Cash $468 million
Total Debt: $422 million
P/E: 10.7
This Clearwater Florida based company distributes hardware, software and networking equipment, and provides services such as training and technical support.
As always, do your own homework before taking a position in any company.
*The author does not have a position in Tech Data. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.
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