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


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July 31, 2008 at 10:05 PM
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