PRO Top Ideas
Top Ideas are high-conviction long or short ideas focused on market mispricings with asymmetric risk/reward profiles.
Lands' End: An Overvalued Retailer With More Downside Ahead
- The bull case on the Lands' End spin-off seems overblown.
- Lands' End is essentially still a subsidiary of Sears, which will hurt growth and increases risk on an investment.
- 2013 earnings are unrealistic for 2014 as the company now deals with added costs to its business.
Callaway Golf: The First Move In A Larger, Downward Trend
- Recent commentary by Dick's Sporting Goods was a worst-case scenario for Callaway Golf.
- Current consensus estimates for 2014 and 2015 will now need to be cut by at least 40%, as well as the possibility for multiple contraction.
- Secular trends in the golf industry make long term-growth forecasts unrealistic.
Pier 1 Imports: E-Commerce Push + Increased Share Buybacks = Outsized Returns
- We believe that Pier 1 Imports provides a unique combination of value, growth, and enhanced shareholder returns at a discounted valuation.
- 2014 estimates seem reasonable, if not conservative.
- New term loan provides the opportunity for sizable share repurchases over the next several years.
- We believe that the company will eventually get over 30% of its revenue from omni-channel initiatives, creating the opportunity for store rationalization and margin expansion.
2014 Ira Sohn Contest Finalist: Long Chemtura Corp
- This investment idea was recently one of four finalists for the 2014 Ira Sohn Investment Idea Contest, which was held on May 5.
- Over the past several years, the management team at Chemtura has divested assets to become a pure-play on industrial specialty chemicals.
- The recent announcement of the sale of its AgroSolutions business will allow the company to improve its over-leveraged balance sheet and return large amounts of cash to shareholders.
- After the tender offer is completed, we expect to company to continue to pursue the sale of the remaining businesses.
- Even without a sale of the business or its remaining pieces, we still believe there is attractive upside in the stock.
Ignite Restaurant Group: Hidden Value In The Company's Attractive Assets
- IRG's valuation has been weighed down by the Macaroni Grill acquisition, but the company's other assets are worth much more that the current enterprise value.
- Recent management shake-up at Macaroni Grill and management commentary leads me to believe that this segment is stabilizing.
- If we were to assign a valuation of zero to Macaroni Grill, instead of its current negative valuation, we could see IRG's stock move into the $20-25 range.
- Even if the business does not stabilize, the segment's attractive real estate portfolio allows for conversions to Brick House Taverns at a lower cost than new builds, or possible monetization.
Bally Technologies: Macro Headwinds Create Attractive, Best-In-Class Buying Opportunity
- BYI's recent weakness is attributable to a weak environment for US slot sales.
- Part of the weakness is due to announcements by its major competitor, which has overly impacted BYI's stock price.
- BYI is the best-in-class company and has already diversified itself away from US slots, yet it trades at a historically low multiple.
- Several major tailwinds will begin to kick in over the next 12 months, which should send shares 50% higher.
American Eagle Outfitters: Risk/Reward Now Becomes Too Compelling To Ignore
- The current bear thesis on AEO is contradicted by the company's brand relevance rankings.
- Brand relevance should provide support for the company to weather the current teen retailing storm, setting the company up for future market share gains.
- The current risk/reward dynamics of the stock are compelling.
UQM Technologies: Many Clues That An Inflection Point Is Upon Us
- Investors may currently be focusing on the car opportunity with Audi and Saab, but overlooking the real upside in the short term, which is a major bus deal in China.
- The company's recent secondary offering and announcement of ISO/TS 16949 Certification lead me to believe that a bus deal in China is imminent.
- Even if this bus deal does not come to fruition in the short run, the company has several other opportunities that could expand over the coming year.
La-Z-Boy: Recent Selloff Creates Attractive Buying Opportunity
- The recent selloff is unjustified considering that recent results have been very strong.
- Analyst estimates for revenue growth seem unreasonably low, setting up the company for a possible re-valuation in the next 6-12 months.
- Even if this re-valuation does not occur, the company will begin to accelerate its returns of capital to shareholders.
- Chico's FAS: I'm Buying This Dip
- Select Comfort: 70% Upside Ahead
- Fiesta Restaurant Group: Balance Sheet Recapitalization Creates Upside To Estimates
- Par Technology: Setting Up To Be The Year For Significant Upside
- Monster Worldwide: Either Way You Slice It, There's Still Upside Ahead
- Agilysys: On The Cusp Of Major Earnings Growth
- 1-800-Flowers.com: A Growing Brand At A Discounted Valuation
- JMP Group: Industry Tailwinds And Company-Specific Catalysts Should Boost Stock 50%
- John B. Sanfilippo & Son: A Stock You Should Be Nuts About
- Quantum Fuel Systems: Inflection Point Has Been Reached, At Least 50% Upside Ahead
- Buffalo Wild Wings - Strong Execution Will Raise Stock 20%
- Keep Calm And Buy Craft Brew Alliance
- Cabela's Inc.: Growth + Value = 50% Upside
- Bravo Brio Restaurant Group: Recent Presentation Gives Us The Catalysts Necessary For A Buy
- Scholastic Corp: Common Core Refresh Equals Big Rewards
- Vitamin Shoppe: Sell-Off And 2014 Tailwinds Create Attractive Entry Point - 30% Upside
- The Real Takeover Candidate In Teen Retailing
- LSB Industries: The Market Is Underappreciating Coming EPS Growth - 50% Upside
- Perficient, Inc. Is Winning And So Can You - 50% Upside Going Forward
- Hooker Furniture: Company-Specific Risks Create An Opportunity On The Short Side
- Interface, Inc: Secular Shift To Carpet Tile Creates 40% Upside
- High Expectations, Even Higher Stock Price: Texas Roadhouse Should Fall At Least 20%
- Big 5 Sporting Goods - Margin Expansion Story Supports 40% Upside