Company Profile: Jamba operates as a retailer of blended-to-order fruit smoothies, squeezed-to-order juices, blended beverages and snacks.
Current Share Price: $2.26 (Jan. 6)2010 Share Price Gain: 30% Comeback Story: Jamba Juice initially gained success in the late 1990s by offering customers a "soulful experience." The company was acquired in 2006 by Services Acquisition Corp. for $265 million, which shortly changed its name to Jamba, Inc. Throughout 2006, the stock traded around $10 before tumbling below $5 in late 2007 as the craze over smoothies died down. Net losses piled up in 2007 and 2008 while shareholders' equity took a hit. During the height of the credit crisis, shares of Jamba fell below 50 cents. However, in June 2009, the company transformed from a menu of smoothies to one that includes sandwiches and salads. Canaccord Genuity analyst Scott Van Winkle is a believer in Jamba's transformation, as he has a "buy" rating and a $3.50 price target on the stock. Van Winkle wrote in a November research report that he believes Jamba has the brand, the management and the strategic operating model to deliver an efficient and profitable company. "The big question with a turnaround always seems to be what to pay for it at various stages of the transformation," Van Winkle wrote. "Nonetheless, we are highly confident that the transformation will occur and have relatively high confidence in how the new business mix will impact profitability and returns on invested capital. We assume that Jamba can improve its financial model, expand its franchise base, turn comps modestly positive and build a robust licensing business."
Heelys (HLYS) Company Profile: Heelys is a designer of action sports-inspired products under the Heelys brand targeted to the youth market. Notably, the company's shoes, which feature a wheel in the heel, became extremely popular and were even banned from some schools. Current Share Price: $3.04 (Jan. 6) 2010 Share Price Gain: 40% Comeback Story: Heelys debuted on the Nasdaq in 2006 after an initial public offering and, at the height of the shoes' popularity in 2007, the stock flirted with $40. But by August 2007, Heelys noted that it was "experiencing challenges at retail related primarily to an over-inventoried position of product at many of the company's domestic accounts." By the end of 2007, the stock traded for $6. In 2008, Skechers offered to acquire Heelys for $143 million, or $5.25 a share. By the beginning of 2009, Heelys fell to nearly $1 and the CEO resigned. Heelys announced the hiring of a new CEO in July 2009 and later settled litigations in connection with its IPO. Wilsey says that Heelys does make some sense as an investment. "The debt-to-equity ratio is zero. This company is just loaded with cash. It can't go bankrupt because it has a good balance sheet. It won't be a big boom company, but it's a good business that can actually make money. If they can just increase their sales just a little bit, whether they sell overseas or in emerging markets, this makes some sense." Michael Corbett, manager of the Perritt Emerging Opportunities Fund, which owns shares of Heelys, says he's not sure what the long-term success of the company will be. "We got hold of a big block of stock below basically net-net. It came available from a shareholder who just needed out, so we picked it up significantly below book value. Fundamentally, I'm not really sure longer-term what will happen with the company, but management as outlined some interesting things to us from the standpoint of trying to get back to basics and turn this thing around. But there was really no downside."
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