Arthur - You are right on the mark ! Strong hands reap, and weak hands trade. Having traded AMES over the past year I have made some decent money from it. Back in 1978 when I also owned AMES, (ADD at the time), a buy and hold policy presented me with a very nice triple over a couple of years. Can history repeat itself ? I believe it can. We have different management today than we had almost 20 years ago, but the exact same marketing policy - namely, we don't go head to head with the "big guys" in the primary markets, we concentrate on the secondary (more rural, less urban), "shopping center" markets. This retailing policy has worked in the past, and it will work in the future, because it is a sound policy. What AMES must do, as Arthur has said so many times in the past, is to increase the sales per square foot of retail space. This can be accomplished by building new stores, which is very expensive, or it can be done by limited upscaling and customizing of the merchandise sold in each of your existing stores, which is far less expensive - and produce the same result, increasing the $Sales/Sq. Foot.
AMES appears to have their selling, general and administrative costs under control, and the current debt picture looks OK.
At it's present level of 15 1/4 , and a consensus earnings estimate of $ 1.34 for F. Y. ending just 4 months from TODAY, AMES is selling for 11.4 X 1/28/98 earnings.
Next week I will be adding AMES to my long term (2-4 years) core-holding portfolio. AMES will represent about 10 % of the total portfolio's value. My expected price target is $ 35.00 before 12/31/99.
MT |
