A Potential Floor for Deep Value Small-Cap Retailers

I don't follow Charlotte Russe Holding (CHIC) very closely, but I noticed today that it received an unsolicited bid from two private investment firms well in excess of its closing price yesterday.  You can read about it in the press release issued by its suitors.  Like CHIC, several of my small-cap retail investments are trading below tangible book value.  I wrote recently about a group of attractively priced retailers that included CHIC. Of course, Crocs (CROX) made the list too!

Given the interest in one of those deep value names that made the list, I am sharing an updated version.  Here are the parameters:

Market Cap > $50mm

P/B <1

P/TB < 1.2

D/C <10%

PE < 25

The list, as of 11/11, has gotten a little longer:

Download consumerbelowbv_updated.jpg

You can refer back to my original article for a whole series of caveats - I am sure I omitted several as well.  The new names on the list are Lakes Entertainment (LACO), Ann Taylor (ANN), William-Sonoma (WSM), Gaiam (GAIA), Hooker Furniture (HOFT) and BJ's Restaurants (BJRI), while A.C. Moore (ACMR) and Kenneth Cole (KCP) fell off. 

I own a few of these and suspect that some of the others merit consideration as well.  Cheap is almost never a sole reason to own a stock, but is sure serves as a good starting point.  Hopefully, today's acquisition offer, in a market that is not seeing too much buy interest, serves as a potential catalyst for some of these stocks.

Disclosure:  Long BJRI, MW and SCVL