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

To: reno4 who wrote (42459)	4/29/2011 10:39:53 AM
From: E_K_S	Read Replies (1) \| Respond to of 78530

Hi reno4 - Welcome to the Value Investing thread. Hope to hear more of your value propositions in the coming months. Re: G. Willi Food-International Ltd. (WILC) WILC definitely has some value characteristics. I like the cash on the books, very little debt, a unique (but limited growth) market that sells to the kosher community (both a positive but could become a negative in a sour economy) and is selling at 82% BV w/ a 10 forward PE. It seems like a well managed company but I don't see any extra ordinary value opportunity except one. That is a play on the $US to Shekel. The company buys it's inventory in $US but collects Shekel's in it's retail stores. In fact their 2011 earnings estimated are only positive due to their strong currency (ie Shekel) which benefited from the weak $US. So, this one positive could also become a negative if the currency conversion trend changes. The company trades at a slightly lower PE (around 10) than the market (around 15 for grocery stores). This could be due to being a foreign company where their products sold are subject to a currency exchange rate risk and they pay no dividend where other competitors do. If you assume a slightly higher forward PE of 13, the upward value might be $10.00/share (13 PE x $0.77/share 2011 earnings) or a 30% potential gain from the current market price. IMO, the currency risk alone could hit next years profits if $US gets stronger (especially when QE2 is completed in June). The company is also exposed to it's niche kosher market customers which could be a detriment if the local economy sours (product margins may fall when prices fall). I just do not think the risk reward is there. This is a thinly traded stock with low liquidity and could pose a problem exiting the position (25,862 avg shares trade daily) vs SUPERVALU Inc. (SVU). Since WILC pays no dividend and growth is constrained to it's niche market, their strong balance sheet just isn't compelling enough for me to buy into it's value proposition. I think I would rather speculate in SUPERVALU Inc. (SVU) or Armanino Foods of Distinction Inc. (AMNF.PK) with lower PE's and both of these companies pay a dividend (3% & 6% respectively) while you wait. finance.yahoo.com I will pass on this one. EKS