It’s been exactly 4 months since my write-up on
7 Bargain-Priced Stocks with Big Upside
Here was the original list from June 8, 2010…
Here are the current prices as of 3PM EST on Oct. 8, 2010…
|
|
June 8
|
October 8
|
$ Change
|
% Change
|
|
DAVE
|
$8.15
|
$10.42
|
$2.27
|
27.85%
|
|
GNK
|
$15.62
|
$16.76
|
$1.14
|
7.29%
|
|
RICK
|
$8.20
|
$7.05
|
($1.15)
|
(14.02%)
|
|
MYE
|
$7.99
|
$9.06
|
$1.07
|
13.39%
|
|
SMRT
|
$6.70
|
$9.70
|
$3.00
|
44.77%
|
|
CLMS
|
$8.86
|
$12.85
|
$3.99
|
45.03%
|
|
CBR
|
$2.72
|
$3.30
|
$0.58
|
21.32%
|
|
Average Portfolio Gain = 20.80% + Dividends
|
|
DJIA + 11.80%
|
S&P 500 + 10.54%
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| |
|
|
|
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I’m satisfied and continue to hold all seven stocks. I am writing covered calls on many of these now.
7 Bargain-Priced Stocks with Big Upside
Here are some nice, bargain priced issues that are highly profitable and cheap right now.
I own shares in all of them as well as being short puts on each as well.
Famous Dave’s of America – Casual dining
Genco Shipping and Trading – Drybulk transportation
Rick’s Cabaret – Adult Entertainment
Myers Industries – Industrial Polymers
Stein Mart – Off-price retailing
Calamos Asset Management – Investment Advisory Services
Ciber – Information Technology Services
Here’s some capsule data on each;
|
Ticker
|
Price
|
2010 Est.
|
2011 Est.
|
P/E 2010
|
P/E 2011
|
Yield
|
52-wk Range
|
|
DAVE
|
$8.15
|
$0.71
|
$0.85
|
11.5x
|
9.6x
|
0%
|
$5.07 – $9.69
|
|
GNK
|
$15.62
|
$4.17
|
$2.60
|
3.8x
|
6.0x
|
0%
|
$15.17 -$29.20
|
|
RICK
|
$8.20
|
$0.93
|
$1.18
|
8.8x
|
6.9x
|
0%
|
$5.50 - $16.05
|
|
MYE
|
$7.99
|
$0.66
|
$0.87
|
12.1x
|
9.2x
|
3.25%
|
$7.21 - $11.55
|
|
SMRT
|
$6.70
|
$0.69
|
$0.79
|
9.7x
|
8.5x
|
0%
|
$6.50 - $13.75
|
|
CLMS
|
$8.86
|
$0.89
|
$1.00
|
10.0x
|
8.9x
|
3.61%
|
$8.79 - $15.33
|
|
CBR
|
$2.72
|
$0.23
|
$0.32
|
11.8x
|
8.5x
|
0%
|
$2.69 - $4.50
|
Each of these is well below their 52-week highs and trades below its typical P/E based on its past valuation history. All seven have single digit P/Es based on their consensus estimates for 2011. Two have current yields better than most T-bonds and bank CDs.
GNK, SMRT, CBR and CLMS each touched new yearly lows in trading today.
Famous Dave’s of America {DAVE:$7.30} and its subsidiaries engage in the development, ownership, operation, and franchising of restaurants under the Famous Dave’s name. The company operates full-service and counter-service restaurants. As of January 3, 2010, it owned 177 restaurants operated in 37 states, including 45 company-owned restaurants and 132 franchise-operated restaurants. Dave’s specializes in hickory-smoked, off the grill items such as St. Louis-style ribs, Texas beef brisket and Georgia pulled pork with all the trimmings. The company was founded in 1994 and is based in Minnetonka, Minnesota.
Restaurants have been a ‘hot’ industry group as fears of the next Great Depression have been fading and life in the USA has been getting closer to the old normal. Casual dining stocks have been excellent performers since the March 9, 2009 low point.
Here is a chart that illustrates that point clearly:
|
Company
|
52-Week Low
|
Current Price
|
% Increase
|
Trailing P/E
|
Forward P/E
|
|
Cheesecake Fac.
|
$11.14
|
$27.33
|
145.3%
|
32.5x
|
19.0x
|
|
Darden Rest.
|
$29.94
|
$44.33
|
48.1%
|
15.2x
|
14.3x
|
|
Cracker Barrel
|
$25.39
|
$46.49
|
83.1%
|
13.6x
|
12.8x
|
|
Brinker Intl.
|
$12.39
|
$19.95
|
61.0%
|
18.1x
|
13.5x
|
|
Bob Evans
|
$20.83
|
$30.89
|
48.3%
|
13.5x
|
13.4x
|
|
Famous Dave’s
|
$3.02
|
$7.30
|
141.7%
|
11.8x
|
10.4x
|
Even though all six of the stocks are up substantially from their yearly lows only Cheesecake Factory shares now trade at a relatively high P/E. Famous Dave’s looks to be the best value in the group based on both last year’s and projected 2010 earnings.
Read more…
Famous Dave’s of America, Inc. operates restaurants. As of June 3, 2009, the Company had 176 Famous Dave’s restaurants in 38 states, including Company-owned restaurants and franchise-operated restaurants. The Company’s restaurants feature hickory-smoked off-the-grill entree favorites. Typical designs include a designated bar, a signature exterior smokestack, a separate entrance for its category-leading take-out business and a patio (where space permits).
Famous Dave’s [NDQ:DAVE] Oct. 3, 2009 close: $5.40
52-week range: $2.00 (Mar. 5, 2009) - $7.25 (Jul. 30, 2009)
Dave’s routinely enters BBQ competitions and has garnered over 300 awards for everything from the best ribs to the best BBQ sauce to the best BBQ cookbook. 2008 saw the first drop in EPS since 2003 due to recessionary conditions as well as a $6.912 MM one-time charge for asset impairment, lease terminations, and unit closure expenses for stores deemed underperformers.
First half earnings rebounded strongly to $0.41 /share and consensus views now see 2009 and 2010 earnings coming in at $0.63 and $0.73 respectively. At last week’s close of $5.40 that makes DAVE’s multiple about 8.6x this year’s and 7.4x next year’s expectations. Compare those with the historical P/Es of the past in the chart below.
Here are the company’s reported per share numbers since 2004…
|
Year
|
Sales
|
C/F
|
EPS
|
B/V
|
Avg. P/E
|
52-wk. range
|
|
2004
|
8.76
|
0.71
|
0.29
|
3.82
|
26.6x
|
4.65 – 13.61
|
|
2005
|
9.66
|
0.83
|
0.40
|
3.51
|
29.4x
|
9.39 – 15.00
|
|
2006
|
11.51
|
1.00
|
0.46
|
3.54
|
26.5x
|
11.09 – 17.24
|
|
2007
|
13.10
|
1.15
|
0.59
|
3.16
|
30.4x
|
11.03 – 23.37
|
|
2008
|
15.46
|
1.15
|
0.04*
|
2.88
|
9.08
|
2.39 – 14.36
|
* 2008 EPS excluding the one-time charges = $0.52
It doesn’t seem a stretch to think Famous Dave’s can snap back to at least 10 – 12 times earnings over the next year or two. That would lead to a target price range of $7.30 - $8.76 by year-end 2010. The low-end goal would be 35.2% above the current quote and the higher target would represent more than a 62% gain.
Read more…
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