NVI,bid.46 letter of alert a couple days ago.
Small float makes it move like a rocket.
Read the news letter.Unreal numbers talked.
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SPECIAL ALERT: National Vision (Amex: NVI)
Last sale: 48 cents
This is probably the best stock idea we have come across all
year. NATIONAL VISION (Amex: NVI) is the nation's fifth largest
optical company. At year end December 28, 2002, the Company
operated 518 vision centers, 399 in domestic Wal*Mart stores,
37 in Wal*Mart de Mexico stores, 58 in Fred Meyer stores, and
24 on military bases throughout the United States. In the first
quarter of 2003, comparable store sales for domestic stores
were up +2.5% from levels recorded in the comparable period
last year, with March sales growth achieving higher levels than
January and February. All three NATIONAL VISION divisions
(Wal*Mart, Fred Meyer and military) reported positive
comparable store trends well ahead of industry sales trends,
which were predominantly negative for the quarter.
Additionally, the Company is in the process of opening hearing
aid centers in Wal*Mart stores, which could create another
similar business as big again.
Revenues for 2002 were $247 million with EBITDA of $24.9
million (up from $23.5 million in 2001). Shareholders' equity
at the 2002 year end was $12.8 million, with cash comprising $9
million of this figure. By comparison, the Company has only 5
million shares issued and outstanding (for a market
capitalization of just $2.4 million) which results in sales per
share of $49.40, EBITDA per share of $4.96, book value per
share of $2.56 and cash per share of $1.80. The average
industry price to sales ratio (per MultexInvestor) is 4.87,
which, if applied to NVI, would give a share price of $240. Not
surprising that every single insider transaction reported over
the last two years has been either a purchase or an
acquisition.
So why is the price of NATIONAL VISION stock so low? The
Company certainly is highly leveraged with $105 million long
term debt at the 2002 year end (down from $118 million at 2001
year end) in the form of senior subordinated notes, however,
the Company is servicing this debt, paying it off and had
enough surplus cash flow last year to repurchase notes with a
face value of $4.5 million.
Perhaps the real reason for the bargain basement stock price is
that the 5 million shares comprising the share capital of NVI
were issued (at an original price of $5 per share) to former
unsecured creditors of the predecessor company in exchange for
their claims. As the 10K states: "Some or all of the holders of
our common stock ... may prefer to liquidate their investment
rather than hold the securities on a long-term basis. The
possibility that one or more of the holders of significant
numbers of shares of our common stock.....may determine to sell
all or a large portion of their shares of our common
stock.....in a short period of time may adversely affect the
market price of the common stock....." We believe this is what
has happened. In our opinion, these former creditors simply
have sold their shares so as to book their losses for tax
purposes and moved on: after all, they are businesses, not
investors.
Hence the big opportunity today. With its tiny market
capitalization, NATIONAL VISION appears to have been completely
overlooked. As a result, the upside potential is huge and, when
the market wakes up to this stock, expect the NVI share price
to explode.
This newsletter has received no compensation whatsoever from
National Vision.
Disclaimer: The writer of Stocks To Watch ("STW") is not
currently a Registered Investment Advisor. It is the intent of
STW to identify and research companies that it believes might
prove profitable investments. However STW is not liable for any
investment decisions by its readers and any use of the
information provided is at the sole risk of the investor, who
is strongly encouraged to do his or her research. The
information contained herein is provided as an information
service only and past performance of featured companies does
not guarantee the future success of an investment in that
company. The writer of STW may, from time to time, hold
positions in stocks featured in STW or receive compensation for
research or consulting services. The reader should assume that
STW or its affiliates hold positions in the stocks mentioned in
this newsletter, bought in the open market or in private
transactions, and that they will buy or sell some or all of
these positions at any time, without notice. Affiliates of STW
own 30,000 shares of NVI, bought in the open market. Because
STW is occasionally paid for its services, there is an inherent
conflict of interest in STW statements and opinions and
therefore such statements and opinions cannot be considered
independent. STW may make forward looking statements about all
companies mentioned and relies on various sources of
information that we believe to be accurate and reliable.
However, STW makes no claims or representations with regard to
the accuracy, completeness or truthfulness of any material
contained herein. |
