My Own Analyst

$JCP

JCP looks like Treasure still after reviewing the call.  Hopefully 17 holds - it's hard to call these- the best I can offer you is to review what I said about HPQ on 11/20.  With that said, it isn't 2X oversold - at 17.25 it's -.82.  I think 17 area holds - can revisit if it breaks 16.90

Buy This Miss

I have mentioned ELY (Callaway Golf) before - it's a management turnaround story.  During the day, there were reports of layoffs, and the stock fell (6.20 to 5.70).  After the close, the company confirmed the layoffs and pre-announced.  Sales were 280mm instead of 285mm, but EPS hit the .05 consensus.  

The new plan is going to hit the balance sheet by $40mm (1/2 cash, 1/2 write-downs) but generate $52mm per year in cost savings.  To frame this, there are 65mm shares roughly.  The company has no debt and cash is $52mm.  Tangible book value is (was) over $400mm.

After-hours, the stock is down more!  It's offered near 5.40.  Let's use $6 for the analysis, cuz that's where the stock should trade in the short-term.  

1. TBV is currently 6.29
2. After adjusting for the restructuring, it drops to 5.70 roughly
3. Company still has cash and no debt afterwards.
4. Earnings in 2013 were forecast to be only .09
5. IF the company succeeds and reduces costs by $52mm, this boosts EPS to .60 or so 

Given how successful the new CEO was and the power of this brand, I think 10PE on 2013 potential is a real bargain...

More thoughts on Housing

I am getting bullish on home construction.  I will share a link soon to an article that I submitted to TradeKing highlighting the builders.  The better way to play, though, is LOW, MLI and maybe LAYN.  I wanted to share this upbeat view, though it's out of the government:

http://www.bloomberg.com/news/2011-07-03/home-prices-very-unlikely-to-fall-further-u-s-s-donovan-says.html

 

File this under "contrarian" and "turnaround"!

ALGT

ALGT reported monthly financial and operational info last night, and April saw about 18%  revenue growth on flattish passenger growth, etc.  The company clearly has executed regarding fare hikes to cover fuel expense.  With falling energy prices and a big short-interest, this one could keep its near-term positive momentum. 

ALGT Traffic Report

http://ir.allegiantair.com/releaseDetail.cfm?ReleaseID=564220

The above link is to the March traffic and other metrics for ALGT.  They appear to have done a good job of boosting revenue per passenger.  Fuel costs are obviously challenging, but other costs, which are temporarily high, were below revenue growth.  The company gave slightly lower capacity outlook for Q2 and gave a similar outlook for Q3. 

I characterize this as mixed.  With the stock so heavily shorted, though, this is actually pretty good. 

SKX Down Again - Why?

SKX is down again today, and Igor asks:

Can you please comment on SKX drop today in light of SCVL earnings?  Was there something mentioned on that call to spook investors of SKX?

As I conveyed yesterday, my read of what SCVL said was positive.  They moved a lot of shoes, albeit at lower prices.  They said that this remains an important category and that new product with enhanced features is moving well and at higher prices.

NKE is getting slammed today, and that is what is pressuring SKX in my opinion.  For some perspective, I attempted to "catch the falling knife" on SKX when they reported in early November.  I have stated that this isn't a quick fix, but I am hopeful that investors start to understand the misvaluation sooner rather than later.  It's been disappointing, but the story remains the same.  They will work through the inventory and come out with high earnings and high growth potential. 

P.S.  While I will never make a guarantee about what I will choose to do in the model in the future, I view the current position as too low at 5%.  My target remains 30 or so a year out.  This would be 1.5X TBV, but I can get there with 2012 earnings of about $2 with a market PE (and that's before consideration of what will likely be a huge amount of net cash on the balance sheet). 

Healthcare Stocks: 32 Stealth Winners

I shared my thoughts on what I view as a potential opportunity brewing in Healthcare stocks, with Pharma and Biotech weighing down an otherwise healthy sector.

Access the 32 stocks

Short Idea: Daktronics

DAKT reports on Tuesday.  The stock has run up close to a good sell spot technically, in my view, and is overbought short-term.  Here are some thoughts I had shared two weeks ago with my clients (when the stock was 11.81):

I liked DAKT down below and failed to stick with it after booking a good gain. I was very unimpressed with the company when I visited, though their end markets of digital billboards, stadiums and other markets seem long-term good. My main concern is that there is competition. I believe that short-covering as well as some buy interest was generated when they last reported and turned the corner on digital billboards. The stock may be a short near 13-13.50. The highest of the four estimates (and most recently changed) for April 2012 is .43. If I assume that and adjust for the cash of almost $0.50 per share (they paid a dividend that's not reflected in the last filing), then at 13 in six months, the one-year PE would be 27. That's not terrible, but I think that it's a bit high. The very best that they ever did was .81, and that would require dramatic growth in sales. If they were to post sales growth of 20% in FY2012, they would do about $480mm. The very most I think in EPS would be .60. Between now and then, there could be increasing concern about stadium spending. I read today about some defeats across the nation on stadium funding initiatives. So, 20X a very optimistic number (adjusting out the cash) six months from now - not so compelling.

As an update, Needham is now at .55 for April 2012.  By the way, I really like the CEO and appreciate many of the aspects of the company and the quality of management.  My comment was really solely about my impression that the barriers to entry aren't that high and competition is greater than I expected. 

I like Lowe's

I shared my thoughts with TradeKing

Redskins Choose Daktronics

While there hasn't been a lot of good news for DAKT lately, perhaps having the Top 20 Model Portfolio investors "rooting" for the company has brought them some luck.  Today, the company announced that the Washington Redskins have awarded them a multi-million dollar contract to upgrade their stadium.