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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (42877)	7/30/2011 12:55:55 PM
From: Paul Senior	Read Replies (2) of 78695

MFLX/CTRN: Lost confidence for MFLX. Concentrated customer list makes me nervous. Sold tracking position for small loss yesterday. CTRN: In today's Barron's: "Why MFS New Discovery portfolio manager Tom Wetherald likes Citi Trends... Savannah, Ga.-based Citi Trends (CTRN) is an example of a best-of-breed stock that was dragged down as investors chucked retailers. The fashion retailer has been an accurate predictor of fashion trends, consumer preferences and general economic conditions in recent years. But it's been adversely affected by higher cotton prices, and its lower-income clientele got hit in the downturn. Still, the company has no debt and nearly $75 million in cash and short-term investments, and it generates more than enough cash to self-fund 15% growth in overall square footage each year. "It has an extraordinary return on investment because its rents are so low," he says. Plus, Citi Trends, which went public in 2005, may be a takeover candidate since private-equity firms have become more active in retail businesses. The shares have traded lately at 14, about 35 times the Street's 2012 earnings-per-share estimate of 40 cents a share. Earnings for 2013 should come in at 97 cents. But Wetherald thinks the company is capable of earning more than $2 a share in a few years. "

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