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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (19891)	10/17/2004 3:46:09 PM
From: schzammm	Read Replies (2) \| Respond to of 79003

Paul, I was just looking at Gold Kist and have to agree with you that it was not a great success. The underwriters had to cut both the size of the offering and the price. However I would like to know why you think the price still looks expensive. I do not want to put words in Eric's mouth but I think we are both looking at current high chicken prices and the fairly recent collapse of grain prices. The low grain prices should hold, due to bumper crops, at least through next July and then adjust to crop expectations and demand. As you stated it could be one's perspective, we could be looking slightly more down the road. I thought GKIS looked rather interesting although I am not crazy about the 50M shares and only 12M float with an " additional 1,800,000 shares of common stock at the initial public offering price solely to cover over-allotments, if any." I am new to the thread so I do not know exactly the board's ideal criteria.

To: Paul Senior who wrote (19891)	10/17/2004 6:50:06 PM
From: E_K_S	Respond to of 79003

Thank you for the input. I really did not consider Cagle's debt to be an issue as their current cash flow is now at sufficient levels to cover it. However, after looking at SAFM's financials compared to Cagles, I like SAFM's much more. They have a low D/E as you stated and good free flow cash flow. They also pay a dividend and are selling at an equivalent PE of around 6. Cagle's at one time paid a very large dividend but this was many years back. I suspect that may have been before they spent all that money to modernize their facilities and cash was pouring in. I believe the Perry Complex that they sold the first quarter of this year was an inefficient plant and compounded their losses when margins were tight. SAFM was a potential 6 bagger if acquired in the 2000-2001 period around $6/share. Based on their relative price performance SAFM vs CGLA (over the last five years) finance.yahoo.com SAFM has done very well. EKS