Shaun Currie, CFA
Long/short equity, hedge fund analyst, momentum

Big 5 Sporting Goods - Margin Expansion Story Supports 40% Upside

Big 5 Sporting Goods (NASDAQ:BGFV), one of the largest sporting goods retailers in the Western US, has seen a rebound in their business, which was hurt hard during the recession because of the regions the company serves, specifically California. Margins troughed for the company in the low 4% range, but have started to turn around, and should return back to the company's historic 6-8% range. This margin expansion creates a minimum 40% upside in the stock going forward. Margin expansion is further supported by a new store concept, favorable lease negotiations, and higher-end (higher-margin) products. BGFV will also enter the e-commerce area in 2014.

The company has a "margin of safety" in the fact that even without margin...

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