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Brian Schieble's  Instablog

Brian Schieble
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Retail investor of five years, fundamentally oriented, short and long investor as cases warrant. Probably characterize my own investing style as aggressive conservative investing with large emphasis on valuation and entry point.
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  • SPWH - Real, Current Potential

    After what is reasonably thought of as a failed IPO, with first the initial underpricing and now the already occurred devaluation of the equity, Sportsman's Warehouse nevertheless looks pretty solid. You could make the case SPWH made out great on the IPO and now that the devaluation has occurred a good point of entry now exists.

    Now let me be straight, I don't approve in any manner with their balance sheet, as they're a typical private equity sell out and now public kind of company. They exist off their fundamentals, I'm sure their credit is good but other than that they have no cover by way of a robust balance sheet. I suppose the possibility exists that they expand too hard, a significant consumer spending depression happens, and they go out of business. Very low probability though. They are set to open 8 stores in 2015. That will be a ~16% increase in current store counts, and assumed a potential increase of 10-20% in revenues. At just 3% NI margin of roughly ~700 million sales they'd be trading at 12x earnings at the current close of $5.95.

    Assuming a 10% CAGR in store count per year they should have over 75 stores in 5 years, which should produce a billion in sales easy. If this share price doesn't move you're looking at a retailer trading at .25x sales.

    I think if they manage it right, steadily, they could maintain 30 million in profit a year within 3 years and keep going from there. So with a 5-year window, they should be able to garner a very normal 15x sporting goods retailer valuation at some point in time, which would lead to a 450 million valuation.

    That leads to a price target of $11.25.

    I'll reiterate from the title, imo it's very real and current potential.

    Disclosure: The author is long SPWH.

    Tags: SPWH
    Aug 14 12:48 AM | Link | Comment!
  • Datalink Offers Good Value Entry Into Cloud Sector

    After an unspectacular quarter with a decrease in unit sales revenue YoY DataLink (NASDAQ:DTLK) offers a compelling valuation entry into the cloud computing sector, which is projected to grow at a large clip in the next 10 years. Service Sales grew at a significant clip and may continue to gain momentum, so when unit sales pop up again, by macro forces or by sheer sales force determination, the stage will be set for a significant increase in share price.

    At a market capitalization of 206 million as of May 12th DataLink has 71.6 million in cash and no long term debt and a projected 5-year EPS growth rate of 20%. 2014 numbers may underwhelm the street and may not reach the consensus 91 cents EPS that was initially projected. That being said, DataLink is clearly a value stock at this moment in time, offering a margin of safety in a lofty market with good prospects in the coming years.

    If DataLink can be earning $1.30 a year within 5 years and continues to build it's cash reserves I would estimate the fair value of this stock to be around $19-$21, which makes the recent pullback an opportunity as far as I'm concerned.

    DTLK Chart

    DTLK data by YCharts

    Tags: DTLK
    May 13 8:24 AM | Link | Comment!
  • Model Portfolio Snapshot, May 2014

    Seeing as the market is in something of a lull here it's a good time to set in stone what a portfolio could look like from my personal perspective and compare it with the overall market going forward. All of these stocks I consider to be safe and with limited downside over the long term, leading to substantive gains over the next 36 months. Only one stock, China Mobile, is a stock I'd consider disposing of after roughly a 25% gain.

    Divided into equal allocations the portfolio's current dividend yield is 2.5%

    Veolia (NYSE:VE) - Last Closing Price of $17.95

    XPO Logistics (NYSE:XPO) - Last Closing Price of $23.75

    Advanced Energy Industries (NASDAQ:AEIS) - Last Closing Price of $17.41

    Fortress Investment Group (NYSE:FIG) - Lasting Closing Price of $6.61

    Johnson Outdoors (NASDAQ:JOUT) - Last Closing Price of $21.80

    Huaneng Power International (NYSE:HNP) - Last Closing Price of $39.62

    China Mobile (NYSE:CHL) - Last Closing Price of $48.16

    Disclosure: I am long XPO.

    May 11 10:40 PM | Link | Comment!
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