ICH Corporation & Bradlees Inc.
siliconinvestor.com
John Keeley of the Keeley Small Cap Value
Fund (888-933-5391), provides the
following stock ideas. Below is the
write-up.
John Keeley of the Keeley Small Cap Value
Fund is devoted to finding companies that
are restructuring, spin-offs of other
companies, trading under book value and e
merging from bankruptcy. John states that
companies, particularly in the value area,
are sensitive to rising interest rates. He
believes that once investors start to cash
in hefty gains made from the high-tech
growth stocks, which have had a phenomenal
run so far this year, "Some of that money
will be reallocated into the smaller
companies and that bodes well for the
sector."
One company John favors is ICH Corporation
(IH 10 3/8), which emerged from bankruptcy several
years ago. It operates 185 Arby's restaurants
and 73 Lyon's restaurants. Keeley finds a lot
of value in ICH because it trades at less
than seven times this year's earnings estimate
of $1.50 and about five times fiscal 2000
earnings of $1.85. He points out that ICH
posted revenues of about $225 million in the
last four quarters, and its stock's total
market capitalization is valued at $28 million,
along with a $6 book value. John believes that
ICH's stock could double from present levels.
Another company John likes is Bradlees Inc.
(BRAD 8) owns and operates 104 discount
department stores in the Northeast. The
company is managed by Peter Thorner, who
led Ames Department Stores out of its troubles
several years ago. Bradlees has come out of
bankruptcy and started to open new stores
for the first time this year.
Keeley figures Bradlees will post a loss of
81 cents in the fiscal year ending in January
of 2000 and will earn between 15-20 cents in
fiscal 2001, "which is a dramatic improvement
in operations!" Bradlees has annual revenues
of $1.3 billion, while its stock market
capitalization is around $80 million and has
a book value of $4 per share. He thinks the
company's stock will be able to trade in the
$12 range once earnings get back on track,
and it is recognized by the Street. |
