Skip to main content

Saks: Strong Buy

While the retail industry as a whole has been suffering as a result of decreased consumer spending Saks has pulled off quite a turnaround. The decrease of the dollar against most other major currencies has been a major factor in this turnaround. A weaker dollar allows wealthy foreigners to come to the US and shop at our stores at a significant discount. The result is 11.7 percent same-store sales growth for 2007. There is also the possibility of a buyout of Saks by Baugur Group which is an international investment company which focuses on retail investments. Most calculations put the potential bid at about $23 dollars per share. Another important factor affecting the price of this stock is heavy short interest. In other words a lot of people are betting that this stock will go down. This is a good thing because if the price of SKS reaches a certain level either by the buyout or by continuing its current success these people who are currently short will cover their short. The result is a short squeeze that would drive the price of the stock up massively. Currently short interest in Saks is at 17.2% of float which is a huge amount. Recently S & P increase their rating on SKS from 3 stars to 4 stars with a price target of 21 dollars per share. All in all I think that Saks is a strong buy and preferably before they report annual earnings on March 5th.
Labels:

Comments

my blog said…
Its really an astonishing fact about Saks.


online stock broker
July 31, 2008 at 10:05 PM
Post a Comment

Popular posts from this blog

NCAV List

Here is an updated list of stocks trading below their net current asset value that you might want to take a look at. Given the recent panic this list is very large but many of them are probably not even worth looking at because they are very unstable companies but I will do my best to take the worst ones out of the list. Remember that these are recommendations on what to research not on what to buy. Also note that an overwhelming majority of these are small cap tech stocks that I don't really understand. I have decided that on my next list I will include a non tech section so you don't have to go through a bunch of stocks that you might not be interested in at all. vvtv asfi crv nuhc twmc msn cobr neng voxx tbac haup infs tues issi dram tiii wga tlgd trid axti mfi hdng plcc tecd (first glance I have no idea why this company is selling this cheaply) trci duck ttil prls mlr fep smrt sts atrm auth bhe trt wmar parl zap dswl gv usu
1 comment
Read more

RIG

To me this stock looks incredibly cheap. first of all it has beat earnings expectations for the last 8 quarters except for Q3 of 2007. Its growth rate, while expected to slow is still incredibly high especially for the price that it is selling at. its price to earnings ratio is 4.94 which is very good. most companies with slow/no growth have p/e ratios under 10 but this company has a p/e under 10 even though it can still be considered a growth stock. this is reflected in another metric called the peg ratio or price/earning/growth ratio. RIG has a peg ratio of .22 which is the lowest in its industry suggesting that it is a good value. The company also has a very solid balance sheet and operates in an industry that is unlikely to take a serious hit even if the world does slide into a recession. As long as oil stays roughly were it is now or goes higher then the demand for oil rigs should go up. Currently oil is priced for a pretty major worldwide recession and I do not see it getting nea...
4 comments
Read more

Net Current Asset Value (NCAV)

Over 50 years ago Benjamin Graham, the father of value investing, began to utilized a measurement of a companies worth known as net current asset value. NCAV is value investing at its purest. You are probably familiar with the measurement known as book value which is total asset minus total liabilities. But NCAV is slightly different. NCAV equals the companies current assets minus its total liabilities. For example: OHB (Orleans Homebuilders) has the following items entered on its Q2 financial statements: Current Assets = 3463.34 Total Liabilities = 2555.12 Total Common Shares Outstanding = 39.21 So the NCAV of OHB is 3463.34-2555.12 = 908.22 This number can then be converted into the more useful NCAV per share by dividing the NCAV by total common shares outstanding. Therefore, the NCAV per share is 908.22 / 39.21 = 23.16. At this point the NCAV per share could be compared to the market value of the shares to determine if the stock is trading at a fair value. You might be wondering wh...
1 comment
Read more