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Shopping for Retail Stocks

The company went public again early last month at $24, and was greeted with enthusiasm, finishing the first day of trading at $31.10. Since then, shares are up another 12%. Wednesday's third quarter earnings release, the first since going public again, was fairly positive with revenue meeting the consensus, but earnings exceeding the 4 cents estimate by 3 cents. The consensus estimate for 2014 ($1.30) implies a forward price earnings ratio of 27. I did own this in its former publicly traded life, but am not interested now.

Last but not least, there's the old time high end retailer, founded in 1919 that I once again have my eye on. That would be Saks (SKS), a name I first purchased coming out of the 2008-2009 market debacle, when shares were priced for bankruptcy.

The company used that time to get its financial house in order, paying down debt, and strengthening its balance sheet. The company, with its $1.9 billion enterprise value, is real estate-rich, including its crown jewel Fifth Avenue New York store, which may be worth several hundred million dollars by itself, if not more. Saks currently trades at 1.33 times book value, and 21 times 2014 consensus earnings estimate.

I'd love to be able to take another position in this name at book value, and will be looking for that opportunity.

At the time of publication the author had a position in RSH.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
At the time of publication, Heller was long XXXX.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.
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SKS $0.00 0.00%
BBY $32.66 -2.40%
FIVE $42.20 -2.72%
JCP $9.66 0.31%
RSH $0.31 12.76%


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