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

To: E_K_S who wrote (40540)	12/12/2010 3:18:26 PM
From: richardred	Read Replies (1) \| Respond to of 78481

I decided to pass on SVU. I have my doubts the dividend will be maintained down the road. They have sufficient cash flow now, but the company has a lot more shares outstanding than Great Atlantic & Pacific Tea Company. They just filed chapter 11 on Friday. Not that I can speak for the rest of the chain, but the Save-A-Lot store by me is not well maintained, and seedy looking. For discounted groceries Aldi's is much busier, cleaner and well stocked. Walmart & Wegmans have also put the P & C chain, that was by my house, in bankruptcy.

To: E_K_S who wrote (40540)	12/20/2010 4:55:55 PM
From: Grantcw	Read Replies (1) \| Respond to of 78481

Hello EKS, I had a few minutes here and wanted to do a comparative analysis of SVU from an EV perspective. I think what makes SVU look really cheap is that it has such a small equity portion compared to debt. So, I wanted to do an analysis (from Yahoo) of Enterprise Value ratios to Sales and EBITDA. Here's what I get: EV/SALES EV/EBITDA SVU 0.24 4.24 SWY 0.31 5.13 KR 0.25 5.47 WMT 0.57 7.24 COST 0.36 9.83 TGT 0.86 7.97 So, SVU is still the cheapest on both metrics, but I don't know if it's really trading on potential bankruptcy risk. That being said, if the EV/EBITDA bounces up to the 5 or 6 level, that's a solid return on the common equity. Especially if debt is being paid down on the way to that ratio value returning. I have a solid position in SVU, and I'm at least telling myself I'm not adding unless it goes down more. Thanks, Grant