insidemadmoney
12-17-2005, 04:59 AM
Quoted from http://www.insidemadmoney.org
Have you noticed how many shares of SLE were traded Friday; the day after Cramer made it his Top of the Show recommendation?
14,143,800 shares to be exact: 4.2 times of its normal trading volume for the past 10 days.
High volume on an impressive gap up suggesting SLE may be on to something. Or was it simply a short squeeze because of Cramer’s recommendation the day before?
In case you don’t know, the short interest on SLE was 14,015,412 shares as of November 20, 2005 according to data from SchaefferResearch.com. This was however about half of that in october 2005. With Friday’s action, I can’t wait to find out what the short interest ratio on SLE is for the month of December in a few days.
However, one day does not trend make. Where SLE goes from here largely depends on Barnes and how she executes her recovery plan.
There are several concerns based on last quarter’s financial data though:
The P/E ratio is extremely high: 35 at current price level; about 2 times its historical average for the past five years. Without a decent pick up on EPS, stock price will not follow through.
Low profit margin of 2.27%: the food business is always a tough business to be in. High gasoline prices can easily eat into an already thin profit margin in the quarters to come. Operating margin was 7.42%, quite disappoinging when compared to industry average of 15.45%.
Declining quarterly revenue: year over year quarterly revenue declined by 2.00%. This is a warning sign if Barnes can not arrest its decline.
This past quarter’s cash flow statement showed that net borrowing has increased significantly. I wonder what was that for: buying back stocks, paying dividends?
With those concerns being said, I still think Cramer may be on to something because SLE is a good conservtive buy considering it pays a hefty dividend of 4.3%. If economy slows down in 2006 due to tight monetary policy, SLE will be a good defensive play.
The bottom line: buy SLE for your conservative portfolio for the long term.
Source: http://www.insidemadmoney.org
Have you noticed how many shares of SLE were traded Friday; the day after Cramer made it his Top of the Show recommendation?
14,143,800 shares to be exact: 4.2 times of its normal trading volume for the past 10 days.
High volume on an impressive gap up suggesting SLE may be on to something. Or was it simply a short squeeze because of Cramer’s recommendation the day before?
In case you don’t know, the short interest on SLE was 14,015,412 shares as of November 20, 2005 according to data from SchaefferResearch.com. This was however about half of that in october 2005. With Friday’s action, I can’t wait to find out what the short interest ratio on SLE is for the month of December in a few days.
However, one day does not trend make. Where SLE goes from here largely depends on Barnes and how she executes her recovery plan.
There are several concerns based on last quarter’s financial data though:
The P/E ratio is extremely high: 35 at current price level; about 2 times its historical average for the past five years. Without a decent pick up on EPS, stock price will not follow through.
Low profit margin of 2.27%: the food business is always a tough business to be in. High gasoline prices can easily eat into an already thin profit margin in the quarters to come. Operating margin was 7.42%, quite disappoinging when compared to industry average of 15.45%.
Declining quarterly revenue: year over year quarterly revenue declined by 2.00%. This is a warning sign if Barnes can not arrest its decline.
This past quarter’s cash flow statement showed that net borrowing has increased significantly. I wonder what was that for: buying back stocks, paying dividends?
With those concerns being said, I still think Cramer may be on to something because SLE is a good conservtive buy considering it pays a hefty dividend of 4.3%. If economy slows down in 2006 due to tight monetary policy, SLE will be a good defensive play.
The bottom line: buy SLE for your conservative portfolio for the long term.
Source: http://www.insidemadmoney.org