It is a little bit difficult to guesstimate the fair price.
This year (Jan/97), it is estimated to make 0.97/share
with a growth rate of 47%. Next year (Jan/98), it is
estimated to make $1.12 with a growth rate of 15%.
BTW, last year, the growth rate is 46%.
Now, let assume the US economy is doing ok (i.e., steady).
Claries will have no problem whatsoever to make this year
estimate of $0.97 a share. Even the CEO said the estimate is
no problem. Further assume Clinton is re-elected and the
1998 economy begins to go downhill but recession will not
begin until late 1998 or early 1999, the $1.12 target is
achiveable and I would believe a 20% growth rate is more
likely.
The estimated long term growth rate for Claries is 15%
(by Wall Street). I would think Claries, with its international
expansion, can and will maintain a 25% LT growth rate.
This means by Jan 1998 -> 25*1.12 = 28. This is my low
estimate. This will give me a 55% return in 1yr and 2 months,
not bad but not OUTSTANDING! I would dare to bet that the 1.12
estimate will be revised upward after Jan97 (after CLE beats
all estimates) to something like $1.25, this means -> 1.25 * 25
= 31.25 by Jan98. This is my 2nd target, again, good but not
great.
For the most aggressive guess, UK and Japan expansion is well
under way and CLE joins the big league. By 1997 year end,
two things are helping CLE: its product is recession proof
and a weak Dollar by that time. While other major retailers
are suffering, CLE is beating estimate an maintain a forward
growth rate of 30% (Wow!) then again using the 1.25/share number,
we get $37.5! 100% return in 1 year and 2 months. A great buy
indeed!
Regardless, CLE is here to stay and have a very bright future.
I just don't see how they can loose money (with the right
management).
Investor Business Daily has a somewhat postive article on
CLE COO. While you are at it, you may want to check out
Thursday IBD. They have an article on Tarrant Group. It is
a very small but very profitable retail company. It is small
and has not been discovered, yet.
I wish I have as much money as you do!
Good luck.
gus |
