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...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details