Shorting stocks: High fliers Message Board

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Strategies & Market Trends : Shorting stocks: High fliers

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To: mike RN who wrote (430)	3/18/1998 9:49:00 AM
From: Bob Rudd	of 709

I'm long BBY. Reason for initial position and holding on was very low Price/Sales and favorable look and feel to stores. Profits went to Hell as BBY battled for sales growth and share without regard to profitability. The competitive environment has become more favorable as many catalog and consumer electronics stores have gone belly - up & Montgomery Ward has shifted emphasis. Suppliers are also competitors for available $'s and the lower costs from Asia present substanitial opportunities for margin enhancement - lot's of consumer electronics are sourced there and . I expected BBY to shift emphasis from sales growth at any cost to margin enhancement and they have done so. BBY and Circuit City have similar sales volume but Circuit's market cap is 50% greater due to higher profitability. BBY is closing the gap on that. This is what analysts are looking at with the upgrades. If BBY can match Circuit's margins, they can grow up to 50% from here [THAT IS NOT A PREDICTION - just an indication that the valuations aren't total lunacy] Recent analyst upgrades show targets of $80-$85. Be well all, Bob

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