I wish it were that simple.
Some participants look for a movement to the low end
of a range as a possible indicator for further weakness.
BGP is trading at this price for a reason. Several issues continue to weigh on the company, including competitiveness concerns against firms which seem better positioned, doubts over strategic intentions, and so forth. Clearly, the storm surrounding top management has not helped.
The current low P/E reflects these concerns. Yet, it could present a good value play for the patient investor willing to take on some risk.
Looking forward, a particular concern involves the relatively tentative efforts in e-commerce (in which a firm should probably decide to either enter decisively and bear the high-risk investment or to concentrate on core business lines and spare substantial costs).
Furthermore, another worry involves the quality of the Borders stores, which at times seem rather unappealing and/or poorly kept up compared to major competitors. Clearly, however, this point represents a matter of opinion to some extent. Coffee drinkers might enjoy the opportunity to have a cup before/during browsing.
Still, the value argument appears reasonable given that BGP could lie on the verge of a turnaround longer-term should the US economy continue its rapid rate of expansion.
Short-term, a light bounce from around 14 1/2 seems possible as the issue undergoes the difficult process of recovery.
Regards,
J. Mintz |
