Jim:
On good days like
today, it's my job
to temper your
enthusiasm, and make
sure the euphoria
gets out of control,
and you start buying
things you
shouldn't...
although when you're
up almost 900
points, it might be
difficult to temper
everything... so
let's do it...
In this market, your
#1 priority remains
capital
preservation...
keeping the money
you have... and that
means finding stocks
where the downside
is very limited... I
mean stocks with a
real, built-in
floor... one that is
objective, that you
can measure...
A stock with a big,
safe dividend has a
cushion, something
that will let it
bounce back, and
make it so that the
declines don't hurt
too much...
But a stock that's
trading just a
couple of points
over its cash per
share?... That's a
floor... especially
if it's making
money.
Tonight, I want to
add a new name to
our stocks that are
trading at, or near,
their cash per
share... and the
stock is...
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Tuesday,
October 28, 2008
(Cont'd from
above)...
That's right,
Bebe Stores, Inc.
(BEBE),
the somewhat - but
not quite - high end
women's clothing
chain. Now,
retailers are
typically not the
kind of stocks we
want to buy, when
we're heading into a
severe recession.
Although retail was
on fire today and
BEBE, up 17%, caught
our eye...
These little guys,
by the way, when
they move... holy
cow!...
This move could be a
flash in the pan,
but the stock has
come down so much...
Anyway, you need
grounding because,
if the move ends,
you're going to get
hammered, unless you
have some cash
underneath... and
that's why we like
BEBE. Although you'd
be nuts to pay up
for it now...
The stock was at $6
bucks. It's a $7.22
stock now. But it
does have no debt,
and it's got $4 a
share in cash...
That's your floor.
That's your safety
net. So don't pay up
but, if it comes
down... and pretty
much, everything's
has been going up
wildly, and then
down wildly, you
know where to go...
Not only that, but
BEBE's got another
cushion... a 2.8%
yield. Although, of
course, when I did
the homework on it,
it was a 3% yield...
This is another
company that didn't
used to have much of
a yield but, because
it's been beaten
down so hard, its
dividend has become
decent.
Your worst-case
scenario with BEBE,
is that it goes down
to $4, where it
would yield 5%, and
you could simply buy
more at a great
price with a
fantastic yield...
Plus, on October
22nd - just the
other day - BEBE
announced a $30
million buyback
which, at the
current price,
represents 5.4% of
the shares
outstanding... and a
whopping 19% of the
float - the shares
that actually trade
- because BEBE's
chairman and
founder, Manny
Moshuuf, owns 56% of
the shares
outstanding, and his
former spouse owns
another 13%. That
small float also
means that BEBE -
which is heavily
shorted... as of
September 25th,
19.2% of the float
had been sold
short... could be
ripe for a short
squeeze on any piece
of good news... or
simply a big rally
like the one BEBE
had today...
Here's the bottom
line...
The bottom line!:Bebe Stores, Inc.
(BEBE)
is a value play,
plain and simple...
People wanted it for
growth, but now it's
got value. A $7.22
stock, $4 in cash...
a $30 million
buyback could eat up
19% of the float...
and a 2.8% yield.
Good at controlling
inventory, some
recession protection
and, most
important... At
last, the
expectations are so
low that BEBE can
beat them!
