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Strategies & Market Trends : Three Amigos Stock Thread
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To: Cary C who wrote (6200)7/1/1998 12:31:00 AM
From: Cary C  Read Replies (1) of 29382
 
here are some reasons that I like SAH.

In a conversation I had with Todd, several things were mentioned.

1. Of the 11.25 million shares, 53% are owned by insiders and institutions own an additional 41.7%. That leaves 596k shares in a float of 5 million. Some of the insiders shares are restricted from acquisitions and may come available a a later date.

2. The COO of Sonic has told Todd that they will hit the 1.26 year end estimates easily. Since they are growing at an easy 30% clip, I feel that a PE of 20 is very justifiable. This would put the stock at years
end $25.20.

3. Todd also mentioned that future acquisitions are imminent and that the company has a lot of things in the works. They have scheduled new institutional meetings and he expects at least 1 if not more new analyst coverage in the forseeable future. He also said that when they have had institutional meetings in the past they have always drummed up new interest. With the declining number of available shares who knows

4. People are always going to need new and or used vehicles

5. They have 23.3 million in cash or about $2.07 per share

6. analyst coverage positive....http://quote.yahoo.com/q?s=sah&d=r

7. Revenues and earnings are blowing away last years numbers.

8. They are expected to do at least consensus estimates of .35 this quarter. Last year was .26. Even if they only hit estimates which I think is highly unlikely given the robust car sales, that will give them .96 for the last trailing 12 months or $19.20 at a pe of 20. They are currently trading at a forward PE of approximately 11.

One uncertainty that remains is what effect if any the current GM strike will have on SAH's stock price. SAH is diversified in their dealerships so they don't rely completely on GM. The dealerships also sell used vehicles. They also will look to increase sells from add on merchandise such as car warranties. Hmmmm oh that's right they sell APCO warranties. A win, win situation.

As always, all thoughts, good or bad are welcome.

Cary
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