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Strategies & Market Trends : Value Investing

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To: Kapusta Kid who wrote (43853)	8/11/2011 11:11:54 AM
From: E_K_S	1 Recommendation Read Replies (2) of 78748

Hi Kid - Welcome to the Value Investing Board. Good call on SUPERVALU Inc. (SVU). Have you arrived at a fair value for this company. I have been wrong on this one for many years but actually have mad a little money buying shares on the way down and selling them on the surprise pops to the upside. Earlier this week, I increased my position by 63% thinking this was a pretty good entry point w/ a Forward PE around 5 and more importantly excellent FCF to cover LT debt (to spare). I have put this in my AG basket as the company has a profitable Food distribution business in the U.S. which I value at $3.00/share. I also view the company as a defensive holding especially in a low growth environment. People have to eat and buy groceries. I am looking for a fair value price around $15.00/share - $17.00/share over three to five years especially as they pay down their debt and real estate values stabilize (SVU own a lot of real estate). The key is for them to keep generating that FCF and building their distribution business and their Save-A-Lot stores. According to their last 10Q "...Fiscal 2012 total debt reduction is estimated to be approximately $500 to $550...." which translates to $2.61/share. BV at $6.68/share (according to YAHOO Finance) would then increase to $9.29/share. Seems like a low risk high return value opportunity (potential 212% return $7.00/share to $16.00/share) w/ a 5% dividend while you wait. EKS

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