Thean, along the lines of small cap, low P/E, much higher (than their P/E) growth rate stocks – may I submit:
MRG – Morton's (of Chicago) Restaurant. They were recently downgraded by analyst on fear that slowing economy would cause the well-to-do to stop dining out. I'm not sure I agree with this premise but the stock got the %$#* kicked out of it. Earnings came out Oct 13 and showed a 15% growth rate for the quarter. Their P/E = 9 and long term growth rate is 20%. A stock repurchase program was approved as well.
Trading volume is usually thin but Friday saw a 20 times increase. The stock was clearly being accumulated with many big block buys.
The company's rebuttal was published October 8th :
Morton's Restaurant Group Calls Yesterday's Drop in Stock Price 'Extreme Reaction' to Analyst's Action
Company Cites Unbroken Track Record of Growth During Years of Economic Downturns
NEW HYDE PARK, N.Y., Oct. 8 /PRNewswire/ -- Allen J. Bernstein, chairman and chief executive officer of Morton's Restaurant Group, Inc. (NYSE: MRG - news), parent of the Morton's of Chicago steakhouses, today issued the following statement in response to yesterday's Lehman Brothers Inc. research report downgrading the stock from a ''buy'' to ''neutral'', based, in large measure, on a projection that future weakness in the economy could have a severe impact on upper-end dining. The report resulted in a sharp drop in the company's stock price.
''Morton's of Chicago steakhouse restaurants, our upper-end dining group, have a track record of comparable revenue growth during each of the past twelve and a half years.
''Our Morton's of Chicago dining concept has demonstrated its extraordinary strength and appeal during periods of severe economic weakness and social stress and change.''
-- For 1987, which included the stock market crash, and the early stages
of the S&L crisis, Morton's of Chicago comparable revenues increased
9.8%, and during the ensuing economic downturns of 1988 and 1989, they
increased 7.9% and 3.1% respectively.
-- Morton's steakhouses posted comparable restaurant revenue increases of
5.6% for 1990 (when the Dow Jones Industrial Average fell 4.3%) and
0.9% for 1991. Both years included the Gulf War turmoil, and a
recessionary period.
-- For 1986, when business meals went from being fully tax-deductible to
80% deductible, Morton's of Chicago's comparable revenues grew 4.5%,
and in 1994, when the deductibility was slashed to 50%, comparable
revenues increased 8.8%.
Calling yesterday's stock price decline, an ''extreme reaction,'' Bernstein added: ''While no one can predict the future, we take pride in our record of accomplishment and success at Morton's of Chicago during both the good and the bad economic periods.''
Another beat up small cap, this one in the transportation industry is MSCA: Volume Friday was 5 times average. Earnings came out October 9. They beat estimates by 2 cents and were upgraded to a “buy” on October 15. Their P/E = 8 and growth rate is 15%. Recent low was 15 ¾. Close Friday was 17 1/8.
The company recently signed a letter of intent to buy certain operating assets of Interstate Trucking Corp. of America, a dry-van truckload carrier based in Merrill, Wisconsin.
“M.S. Carriers said in a statement that it expects to hire 280 drivers, enter into short-term leases for Interstate Trucking Corp. power units, and purchase 803 trailers from Interstate Turcking.
Its stock was last at 17-1/4, up 1-3/8 on the day.”
From Baseline:
M.S. . Carriers Inc. is a trucking transport company which hauls truckload shipments of general commodities throughout the US and in Canada. It also has interline service to and from Mexico. The main types of freight transported are packages, retail goods, nonperishable food, household appliances, paper, furniture and packaged petroleum products. At Dec 1997, the company owned 2,370 tractors, leased over 770 tractors and owned nearly 9,000 van trailers. The company's "premium services" include on time deliveries, late model equipment, computer systems to monitor shipment status and loading or unloading assistance. In 1997, the average trip was about 633 miles. In 1997, the company acquired Hi-Way Express & in 1998 purchased assets of Challenger Motor Freight.
From the apparal sector three that I have been eyeing are TBL, KIDD and TNFI. TNFI a few months ago bought another company and moved their corporate headquarters. Many uncertainties – will probably wait until earnings come out this week for this one. P/E = 9 and growth rate is 26% . KIDD announces Thursday. Their P/E = 13 and growth rate = 20%. TBL has a P/E of 6 and a growth rate of 19%. They announced earnings on last Thursday of $2.47/share. They also announced a stock buy back. Friday volume was double the average. I've followed all three of these for some time now. Exhibiting bottoming behavior.
Also really fond of your PMRY choice. Plan to act on this one myself.
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