No. of Recommendations: 11
Good comments, thank you.
1)It's a simple business to understand that is making money/cash. Almost 20,000 of the same thing.
2)Seems it would/is hard hide much on their balance sheet compared to a lot of companies.
3)Wouldn't surprise me if someone (PE) would make a run at them if the price stayed where it is. The price is 50% off 10 months ago price. PE might stop the Mexico expansion or sell it off, cut new store openings, pile on more debt for a larger return on equity, and cut expenses to the bone to the extent they do take some bone. Bring it back public in a few years making billions.
4) Comps next year should be good.
5) Buying a company making decent money and selling for 50% of sales revenue isn't too bad a bet, normally.
6) Buying 2,000 tractors and maybe 5,000 trailers to run your own distribution efficiently probably takes 2-3 years at the best.
7) They are not saying 20% of their stores are losing money and need to be shut down.
8) An off balance sheet asset is their long term leases with multiple 5 year options. Say one new lease being offered at 6.75% Cap rate. Initial lease was for 15 years with 5-5 year options with 10% increase every 5 years. That's probably a 1.8% annualized inflation increase for 40 years. My point is that some of the older leases probably have some equity value.
Yes, optimist outlook as long as you have the patience to wait AND don't think the basic units (store) model is broken.
You're only as good as your dumbest competitor, which I don't see that in this industry. You need scale and they have it to compete.
Probably should do a Buffett trick and buy Dollar Tree/Family Dollar also. Then you own the industry.
Just thoughts!! --- though rose colored glasses.
