The Dirt Cheap Value Portfolio: Significant Rally Brings Redemption And Reward

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Includes: BRID, JVA, KKD, LUB, SVU
by: Mark Krieger

Summary

BRID's incredible earnings will slingshot its shares 20% to 30% higher.

JVA will put up solid numbers on Friday, thanks to a 50% gross profit margin improvement.

The "DCVP" outperforms the overall market by 50%.

It is hard to argue that stock market investors have not seen a glorious market, the past four weeks, since my last update. After all, the Dow rose a extraordinary 6.6% from 15,925 to 16,978, but "DCVP" investors faired even better, racking up almost 10% in gains, from $34.50 to $38.40. All five of its components, were in the plus column, with SVU taking the prize, with a notable 22% leap.

the esteemed list:

Coffee Holdings Company Inc. (NASDAQ:JVA): The roaster is likely to report its first quarter results by the close of the week. Look for them to brew sales of $36.50 million (a 5% drop on lower coffee prices) but gain favor, from a gross profit margin swell of 300 basis points, to 8%. As a consequence, earnings will rise tenfold, from 1 cent to 10 cents.

In addition, the company will then be able to resume its stock buy back program, according to a recent interview with CEO Andrew Gordon featured in the Wall Street Transcript. The stock has started to perform much better recently, and had its largest volume day of the year last Monday. You know what they say, "volume always precedes price". Maybe Mr. Market is telegraphing an upside surprise. I certainly wouldn't doubt it.

price target: $9

Bridgford Foods (NASDAQ:BRID): The snack food enterprise released its best first quarter results in more than a decade, when it put up earnings of 21 cents versus 5 cents, last Friday after the market close. Sales rose 4% to $36.15 million despite a 7% drop in its frozen food division. The big catalyst, was more than a 1000 point improvement in its gross profit margin, from 27.70% to 38.40%.

Net cash on hand, tripled from $5 million to $15 million, while its Wal-Mart business grew 500 basis points to 41% of sales. In addition the company announced new partnerships with both BJ's Restaurants (NASDAQ:BJRI) and Dairy Queen to provide them with portion controlled monkey bread, for breakfasts and desserts. Since the float (about 1 million shares) and the volume (average daily volume is just 700) is so small, look for as much as a 30% rally on Monday morning.

price target: $15

SUPERVALU Inc. (NYSE:SVU): Jim Cramer did a real number on SVU stock in his recent analysis. Although his historical view was accurate, his final opinion was absurd, and should be construed as a contrarian indicator. In fact, fellow Seeking Alpha author "Hawkinvest", has taken an extremely bullish stance, with five positive articles released in just the last six weeks, alone. The shares should rebound significantly, once the details of its proposed Sav-A-Lot spinoff are finally revealed.

price target: $8

Krispy Kreme Doughnuts Inc. (NYSE:KKD): The doughnut enterprise will be releasing its fourth quarter report on March 22. Analyst estimates are too low, with a top line of $133 million and a bottom line of 21 cents. Look for KKD to nicely surpass those forecasts, with sales of $136 million and earnings of 26 cents. The better results will be derived from traction in its coffee sales, lower commodity prices and a reduction in shares outstanding.

price target: $25

Luby's Inc. (NYSE:LUB): The shares have seen a nice bounce from their lows, in fact they have recently risen over 35% and successfully broke above their 200 day moving average line. Next month, the eatery will release its second quarter results. Look for the iconic restaurant chain to report earnings of 2 cents versus a loss of 5 cents. Sales will likely be flat, at around $91 million.

The improvement in earnings, will mostly be attributable to lower commodity and interest costs. In addition, the company could offer more details its quest to bolster its culinary service operations. Management had previously indicated they were in late discussions with landing a substantial hospital operator contract. Further sales traction could come from its recent addition of Travel Centers of America, as a Fuddrucker's franchisee.

price target: $9

Disclosure: I am/we are long LUB,JVA,BRID,SVU AND KKD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.