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Two components of the “DCVP” were replaced. One was for a good reason, the other, unfortunately was not for such a good reason.

First the good news: Long suffering shareholders hit the jackpot when Winn-Dixie (WINN) received a cash offer from for Bi-Lo for $9.50, and that WINN's Board of Directors unanimously recommended shareholders to accept. After all, it is extremely hard to pass up a very juicy 70% premium. The chances of a sweetened offer developing are remote, however, for you optimists, the likeliest bidder would be Delhaize.

Now for the bad news: IPSU issued a news release stating it would defer its 10K filing an additional two weeks, due to the need for further time necessary to compile asset impairment values, derivative gain recognition, investment carrying values as well as obtaining financials from its LSR joint venture. The company (via a form NT-10K filing) now expects to lose $55 million for fiscal year 2011 and revealed auditor verbiage of the following: “Substantial doubt that the enterprise can remain a going concern” will be included in the 10K. No doubt this language is scary, but investors should realize that it is also standard “CYA” boilerplate jargon.

In the meantime, IPSU was given some breathing room when it announced it was successful in selling its LSR joint venture back to the other two partners for $18 million ($14.2 million cash, $3.8 million over a 21 month period). Although the stock presents more reward than risk at this juncture, I am removing it from coverage, because at the end of the day, it’s all about capital preservation (it is OK to cut your losses), enabling one to live to fight another day, and I definitely don’t want my investment life snuffed out.

The newbies:

Krispy Kreme (KKD): The donut chain has gotten its act together by reducing its long term debt down to a measly $25 million, increasing same store sales 12 consecutive quarters (its most recent quarter showed 4% growth) and built earnings enough to reach a reasonable multiple. A run back to $10 is not unrealistic. Target price: $8.

Bridgford Foods (BRID): The snack food purveyor has no debt, extremely high management ownership ( they own 81%) and pays a 10 cent cash dividend. Once commodity processes begin to stabilize, the company will be in good shape for an earnings turnaround. Target price: $12.

The rest of the gang:

Safeway (SWY): Cantor Fitzgerald slapped a sell rating and a $16 price target on the shares. I am wondering if this sell side analyst is bashing the company in order to get its best clients in. Target price: $22.

SuperValu (SVU): Cantor Fitzgerald pulled an “about face” in comparison to its SWY view by giving SVU a buy rating and a juicy $10 price target. Target price: $9.

YHOO: Two analysts turned sour on the iconic search engine by issuing downgrades, as both Goldman Sachs and Evercore claimed the risk of a takeover not coming to a fruition exposes the shares to too much downside. As far as I am concerned, the logic is pure hogwash. Target price: $19.

Luby's (LUB): Outside Director Frank Markantonis must like the stock, because a recent SEC filing revealed his holdings increased 17% to 26,958 shares with the purchase of a 4,500 share block on 12/13/11. Insiders buy stock for only one reason - to make money and following them is a “no brainer” because they have more intimate knowledge of their company than just about anybody. Target price: $6.

Steelcase (SCS): The office furniture purveyor is slated to report its third quarter earnings this Thursday, Analysts expect it to increase earnings 6% to 19 cents on sales of $707 million. This modest improvement is more than realistic to achieve. Target price: $7.

JetBlue Airways (JBLU): The regional carrier ran up another 10% while Investment Underground deemed it “best of breed” in a recent Seeking Alpha article. The shares are only a 27% gain away from doubling in less than a five week time frame - simply unbelievable. Target price: $6.

Pep Boys (PBY): The company put itself up for sale last year, but was not pleased with the offers. Since then, it has improved operations enough to likely fetch a higher bid in the $14 to $15 vicinity. Target price: $13.

Dean Foods (DF): Dimensional Fund Advisors has been lapping up the shares like there is no tomorrow. The fund recently upped its ownership 37% when it purchased another 1.94 million shares, bringing its total stake to 3.3 million shares. Target price: $12.50.

Source: Dirt Cheap Value Portfolio: Out With The Old, In With The New