Tough day for someone who wants buy stocks but who doesn't like to pay up for 'em. Looks to me like only pharmaceuticals and medical products are down.
Shane, I'll start an exploratory position today in your CPC.
The strengths of Central Parking as I see them seem to be apropos to what Mr. Buffett's followers might be interested in. CPC is a dominant player in its industry, it should have the ability to raise prices over time (depending on contractual arrangements), it is in a business that is likely to be around in 10 years, it is a business that is maybe, relatively easily understood. (Aside. -g- I must challenge my own statement here - "easily understood" - I've been inside too many business not to realize that they are all difficult to comprehend, and especially when one is an outsider; I'm not claiming that I understand CPC.)
CPC has some ability to control earnings to some extent, because as central city land becomes more expensive, and given that CPC owns some of its parking facilities in downtown areas, CPC can profitably sell those parking lots to developers (which is what All Right Parking used to do before it was acquired by CPC).
On the other hand, there are negatives too: CPC sells at a pricey PE imo. (That seems to be so for at least the last four or five years though.) And CPC is not immune from downturns in the economy it seems:
From the Feb. 13 quarterly report:
Monroe Carell, Jr., Chairman and Chief Executive Officer, said, ``Excluding capital gains and special items, our earnings in the first quarter were down slightly from a year ago. This comparison reflected a significant effect from the adverse weather that was prevalent in the Midwest and Northeast during the quarter. Although our revenues were down from the prior year because we are operating fewer locations, we are very encouraged by the results of our marketing activities thus far in fiscal 2001. We had indicated that reestablishing positive momentum in this aspect of our business was a top priority for us this year. We are also continuing to take steps to reduce expenses and increase productivity throughout the organization. We face a number of challenges over the remainder of fiscal 2001, including the impact that a slowing economy can have on parking revenues in central business districts, but we believe that our earlier forecast for an approximate 10% gain in earnings for the full year compared with $1.10 per diluted share for 2000 is still achievable at this time.''
For me, I would like to see a better dividend yield, additional insider buys (instead of sells), and some indication that there's a fix to whatever is keeping CPC from achieving its past good ROE.
stocksheet.com
This stock may not be "safe and cheap" as Marty Whitman likes, but until I'm corrected, my opinion is that the stock is safe (in that the company won't fold). And I'll bet the stock can get back to 2-3x stated book value - say $25-35 -from a price under $18 now - within a couple of years.
Jmho, and I have been wrong many, many times.
Paul Senior |
