Tony Kent

Borders "Faces" Higher Sales

BGP is an extremely cheap stock. While the new concept and restructuring will be in fits and starts the stock at $7.50 is compelling. Assuming the company can get operating margins into the 4.5-5% range by 2010 BGP has earnings power of $1.83-2.00. At 10X EPS which was the companies low EPS in the last 10 years the stock can trade between 18-20. This is valuation is backed up by the $20 price target being equal to 0.03X sales in 2010 which prior to this massive selloff was the p/s low of 2000.

I have no idea what earnings will look like. But longer term this stock offers good opportunity.