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

To: geoffrey Wren who wrote (43948)	8/15/2011 3:11:21 PM
From: Grantcw	Respond to of 78763

SVU - to respond to you and Clownbuck with my thoughts on SVU: Debt is being paid off pretty rapidly in my opinion along with continued opening of Save-A-Lots which are doing well. The dividend could still be cut, but I was more scared about it earlier in the year than I am now. My view is that it's true that they're not as cheap from an EV perspective as they are from a market cap perspective ratio-wise, but they are still on the cheap side for EV. And if the amount of debt they're paying off each year went to their market cap as the EV ratio stayed the same, SVU stock would do pretty well. I also don't think we need to wait 6-7 years for all of the debt to be paid off. I don't think all of the debt will be paid off, I think they're just looking to get debt down to industry norms. As they get closer to industry norms, I'd hope for svu stock appreciation. I think that with their recent quarter, they finally got a successful management move in granting authority toward local premium stores to move towards local products/deals. But, we'll see how long that maintains. All this being said, I had a big position in SVU earlier in the year and sold ~10. In the 6's and 7's, I'm considering buying again, but there are lots of cheap plays around these days and so from a relative valuation standpoint I feel ok with my reduced SVU position. Thanks, Grant