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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Bob who wrote (17040)	12/20/1999 4:57:00 PM
From: Rande Is	Read Replies (2) \| Respond to of 57584

No, Bob. I passed on ESHR, due to it being up 100% in past week. . . I don't like being late to the party. . . now if I had even the smalles position from $8, I could have added today or last week. . . which is why we buy and hold the floors. . then add on momentum. Rande Is

To: Bob who wrote (17040)	12/23/1999 10:56:00 AM
From: Bob	Respond to of 57584

CAV Message 12340528 And news today:Stock of the Day Dec 23, 1999 Cavalier Homes: Value Sweet Value Senior Analyst: Glenn S. Curtis (12/23/99) Homebuilders across the board have underperformed the market this year, and Cavalier Homes (NYSE:CAV - news) , a maker of manufactured house primarily in the south, is no exception. The stock hit its 52-week high of $11.44 exactly one year ago. But since then it has sank like a rock on worries about higher interest rates. It closed Wednesday at just $3.75. Should this stock have gotten whacked so badly? We think no. True enough, the strong economy has spurred increased competition in manufactured housing. This has led to increased price competition and in turn to higher inventories on the retail level that must be worked through. This will take at least a few quarters, but it is not the death knell of this industry by any means. The company has adjusted by consolidating its manufacturing plants and cutting costs. The steps led to a $0.05 per share charge in the third quarter ended October 1. Sales also took a beating during the quarter and were down 17.3% from the same period last year. The drop in sales was not a big surprise. Home shipments decreased 19.2% during the quarter. As a result of the lackluster top line performance, gross margins slipped 130 basis points to 18.2%. Also not surprisingly, the company lost $0.09 per share in the quarter. This compares to a net profit of $0.26 per share in the third quarter of 1998. But on the balance sheet, all is not gloom and doom. Cavalier has $1.25 per share, in cash, equal to one-third of its stock price. The book value is $7.52 per share. Tangible book value, which excludes stuff like goodwill, is $5.19. We told you it looks cheap. Executives seem to agree. They have bought more than 78,000 shares in the open market since July at prices ranging from $5.50 to $6.18 per share. The buyers have included president David Roberson, who bought 10,000 shares in both August and November, and Arthur Jumper, a director who has bought shares several times this year, most recently picking up 10,000 shares in November. In July, he bought 41,000 shares. Jumper was chairman of Belmont Homes, which Cavalier acquired two years ago. Even before these purchases, officers and directors owned a respectable 11.8% of the outstanding stock, according to the most recent proxy. This should give them ample incentive to find ways to enhance shareholder value. As icing on the cake, in the third quarter the company repurchased just over 91,000 shares. This was part of a four million share repurchase program, and roughly 1.5 million shares are still eligible for repurchase. We suspect the company will be in the market buying stock if the share price continues to trade at current levels. Arnhold & S. Bleichroeder analyst Barbara Allen commented that, "this is a great value play. There are no real near-term catalysts. But keep in mind that the manufactured homes industry was struggling in the early 80s, but this company survived and paid its dividend consistently.” “Cavalier has almost no debt and management is very conservative.” Allen says. “Because of its cash position and solid balance sheet the company is also in a great position to pick up the assets of other companies that are struggling." Even so, Allen only has a “neutral” rating on the stock. Allen thinks that Cavalier will earn $0.30 per share from operations in 1999 and that the company could earn up to $0.50 per share in 2000. That said, Allen says, "The next few quarters could be tough, particularly with the colder weather coming. Some retailers could go out of business, which would ultimately be good for the industry, but in the near-term will certainly not bode well for homebuilding stocks." While the company has the balance sheet to endure the industry's current difficulties, like any homebuilder, a severe recession would be especially hard on it. But long-term trends are in the company's favor. Its homes are affordable to average consumers. They range in size from 656 square feet to just over 3,000 square feet and are popular among newlyweds, retirees and people looking for an affordable vacation home. Homebuilders are not in favor by any measure. But with the company expected to be profitable in 2000 and its shares now trading under the tangible book value, we can't help but see value here. Bottom Line: If the competition among manufactured homebuilders persists, the weaker players in this market, particularly those with weak balance sheets, will eventually be shaken out. This in turn will help to provide a catalyst for the more well financed companies like Cavalier