Here is an upbeat article for SuperValu. I bought more today as I believe the current price is getting quite compelling.
SuperValu: Is It Time To Go Shopping?
(Stock price $26.44 on date of publication- 8/7/2008)
by: Dividend Inc August 07, 2008 | about stocks: SVU
seekingalpha.com
Mervyn's recently went bankrupt after agreeing to much higher sales leaseback terms when they restructured last year with a private equity firm. Their higher lease rates eventually bled them to death and they announced the closure of all their stores last Friday.
I was a bit concerned that SuperValu might have entered into similar "sales leaseback" agreements from their recent Albertsons acquisition. I did not find any such news.
On their corporate Web site, you can toggle through their retail stores(s) and see the number, location and store brands they now own. They really cherry picked the ABS stores (including the high end stores Shaws & Bristol Farms) and kept the best of the best (ie most profitable & best locations). supervalu.com
They own the land, buildings and fixtures for the stores they kept. That is why they sell below book since current BV reflects the new purchases at cost (last years market value). Actual BV may be even higher if you adjust the value of their older properties to reflect current market values. Either way, the current stock price is significantly below BV. Yahoo has BV at $29.00/share! Based on today's close at $16.50, SVU sells at 57% of BV.
On September 19, 2008 (less than 30 days ago) Fitch reaffirmed their debt rating at BB+ (investment grade). Fitch said its rating outlook was "Positive," which implies an increase in the ratings is likely usually at some point in the next eight to 12 months. (http://money.aol.com/news/articles/qp/ap/_a/fitch-affirms-supervalu-debt-rating/rfid141057798?channel=%22pf%22).
Here is a six month price chart. Notice the new Yahoo "Event" features showing both key events and insider transactions on the chart. On October 14, 2008 the company lowered FY 2009 EPS guidance. The stock traded twice the normal volume down to $17.42.
finance.yahoo.com
I am looking to build a position for SVU to get it to a top 10 position in my portfolio. I am half way there with today's buys.
Other than their debit which they are paying down ahead of schedule, I believe SVU is one of Buffet's "Buy America" companies.
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Bought more PWE, GE, MRK and PBR today too.
finance.yahoo.com
EKS |
