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JOUT - Recent PPS Drop Offers Significant LT Value

|Includes:Johnson Outdoors Inc. (JOUT)

For a disciplined company with a good amount of cash, that has been paying down it's debt to all time lows, and expanding and improving upon it's product offerings the market sure is mistreating this name.

It dropped from 26 down to the 21-22 range in the span of just a few days back in the end of January.

Assuming that in fact the company will not reach projected EPS for 2014 as the few analysts covering it had expected (an EPS of 2.25) but instead we will say a year even slightly below last year, so $1.80 instead of $1.90, you're still buying this company for just over 8x EV/projected net income. And that's this year. And it's only because of an aberration winter that produced such bitter cold as to delay the start of fishing season by mere weeks.

Their stated goals are to grow profits faster than they grow sales by de-emphasizing the lower margin businesses, to get their net income margin into the 5-7% range and to grow revenues at a 3-5% CAGR per year.

I also expect them to continue to make acquisitions here and there, as they did with JetBoil in the past few years, and this should add to their long term valuation.

So the main thesis points are

-Lots of cash (55.7 million at year end 2013) will drive product innovation and further acquisitions.

-Minimal, even negligible amount of debt of 8 million

-Highly competitive, diversified and innovative products in a healthy sector serving hard working and "willing to spend" sort of consumers.

-Recreational sector has not fully recovered from pre-recession levels, and in the future could exceed prior levels, so revenue growth isn't absolutely guaranteed but I'd say can be reasonably expected so long as GDP continues to be healthy in USA and elsewhere.

-Global Footprint means the number of consumers that will potentially add to sales in the future will grow immensely with population growth and wealth growth in the developing world.

Disclosure: I am long JOUT.

Stocks: JOUT