The Buckle
Since adding The Buckle (BKE) to our portfolio on Nov. 10, its share price has appreciated more than 10% over our buy limit, even though its quarterly earnings report released one week later came in below expectations. The company reported third-quarter profits of 48 cents per share, three pennies shy of the average analyst estimate of 51 cents.
However, even after its surge last month BKE is still priced at a considerable discount to its peer group, trading at less than 11 times trailing earnings (sector average is closer to 25 times) and under three times book value (compared to almost 6 times for the sector). It also pays a dividend yield of 3.9%, which is more than twice what the average retailer pays.
What that means is either BKE is undervalued by at least 50%, or everyone else in its sector peer group is overvalued by 100%. In large part that is due to the 45% short interest in the stock (as a percentage of the float), but that could end up working in our favor if the stock price continues to rise and the shorts decide it’s time to close out their positions. Let the “short squeeze” begin!
Stock Talk
Rick
And a special dividend as well.
Jim Pearce
Rick – You are correct, and the stock is up 3% today on the news! http://finance.yahoo.com/news/buckle-inc-announces-0-75-120000923.html
Rick
Made my day when I heard it on CNBC while driving to work this morning. One of the advantages of not having a lot of debt.
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black arrow
Rick,
Thanks for bringing the spec div to our Attn.
By coincidence yesterday AM I bt another 100 shares not even knowing about the special dividend. Really I was testing out the reversion to the mean idea, so far that is working on BKE for me.
Cheers
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Larry Johnson
Yes….thank you, Rick fro the “heads up” on the that special dividend. I’ll take “free money” anywhere that I can find it….LOL
Black Arrow, we must think alike: Although I’m nowhere near into the advanced Tech Analysis as you are, I picked up another 100 shares not knowing about spec div myself from looking at the basic fundamentals. Regardless of the data means, great minds must think alike, my friend…LOL.
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Janis Bell
Anyone else lose their BKE this morning? With the stop loss at 25, mine went at 24.95. Still have a 1.45 profit per share, but sorry to see it go when it still seems to have potential per Jim’s analysis.
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