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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (19636)9/3/2004 12:51:52 AM
From: Paul Senior  Read Replies (3) of 78688
 
SHRP. The negatives are the insider sales and machinations by that key insider/his family. An issue is whether their best seller - Ionic Breeze - is a sham or maybe already has saturated the market. Also, same-store sales, a very signifcant indicator for these retailers was down in August.

SHRP has a unit devoted to coming up with new products. They've been successful in past, and I suspect they will have additional successes (not as good as the huge Ionic Breeze though). At a p/sales of .39 and a profit margin of 3.7%, I expect that to be reasonable compared to past years. I could be anchoring poorly though. Similarly, although I now value SHRP as undervalued up to $23/share (lower than my last $28 adds in June and July)based upon SHRP's current ROE, that valuation figure could drop if earnings decrease. I am hoping a 16% overall gain in sales this quarter will help translate into okay earnings this year and next, although I suspect quarter-to-quarter (year over year) same store sales comparisons may be difficult.

All that aside, you could be right that I'm anchoring incorrectly with this stock. I still have some shares bought in '01; I bought and sold some in '02 and sold more late '03. As the stock has come down I added a bit, and now again 10 points lower. Possibly the stock will drop yet another 10 points; I am hoping gas prices will not have that dramatic effect on retail sales.
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