The Dirt Cheap Value Portfolio - Despair, Destruction And Doom Dominate

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

Summary

Bridgford Foods is the only winner, vaulting 13%.

SuperValu and Luby's each suffer 9% beatings.

Coffee Holding's third quarter results are imminent- could offer redemption.

Luby's selloff makes it, even more vulnerable as a takeover target.

I'm not going to lie, I am feeling mighty low about my positions, especially after Friday's meltdown in the overall market (caused by rising interest rates anxiety). Since my last update, the Dow has fallen about 2% from 18,571 to 18,085, although the "DCVP" was essentially flat at $31.41, versus $31.31.

The crux of the problem is skewing- if it wasn't for Bridgford's 13% gain, the DCVP would have lost 6%, crushed at three times the rate of the DJIA. The carnage was clear-both SVU and LUB gave up 9%, while JVA sustained a 6% chiseling. WPRT barely moved, logging in a two cent drop. The good news is, "despair, destruction and doom", equate to extreme bearish sentiment, which always signals a market bottom. After all,"fear and greed" are the biggest market drivers. Those who can rise above the noise and emotion of the markets, have the discipline to prosper.

Luby's (NYSE:LUB): After a 9% clubbing, this dog with fleas is quickly approaching its 52 week low. The eatery just completed its fourth quarter, but earnings are still a few months off. The selloff has really amplified the stock's extreme undervaluation, as it now sells at just 28% of annual sales and 70% of book value. The lower its market cap becomes, the more vulnerable it is, to merger and acquisition activity- chiefly attributable to its valuable real estate holdings. Sometimes, and especially in Luby's case, the pieces are worth more than the whole.

price target: $12

SuperValu (NYSE:SVU): Last week, the supermarket operator issued lower full year guidance, by reducing its EBITDA target to 95% of its prior year. As far as Fiscal year 2017, management expressed excitement and encouragement, regarding growth in its core wholesale segment. More color can be obtained by accessing the Goldman Sachs Global Retail Conference, that SVU just particpated in.

price target: $9

Westport Fuel Systems (NASDAQ:WPRT): these guys are also a value play, selling at smidgen under book value and just over one times, annual sales. In fact, they produced a better than expected second quarter report, with a net earnings gain. In addition, a new exciting product was just released-the GS2 high flow CNG fuel injector made its industry debut.

price target: $7

Bridgford Foods (NASDAQ:BRID): its stock just made a new 52 week high at $15.90, but has since pulled back. The beautiful thing is the shares keep making higher highs, and higher lows-nirvana for the technical trader. Possible reasons for its strength? A solid third quarter report, and speculation brewing, of inclusion into the Russell 2000 Index.

price target: $25

Coffee Holdings Company (NASDAQ:JVA) Third quarter results could be out as early as September 12th, and a better than expected report could be in the cards. Expectations are quite low, due to the reduction of sales to Keurig Green Mountain. Analysts are expecting a 11% drop in sales from $27 million to $24 million, but look for earnings to improve 50% from .02 to .03, on higher gross profit margins. A report surpassing this, could send the shares into orbit. Note: JVA's recent success in landing new customers, such as Smart & Final, Wal-Mart, Grocer's Supply and Food Lion will not have a material impact on its third quarter, but will surely benefit the coffee purveyor's fourth quarter.

price target: $14

the bottom line: I always prefer to buy when selected equities are involved in maximum suffrage. That's what contrarians do. How else are you supposed to buy low? The reality of the action, converts "despair, destruction and doom", into "dandy, delightful and dazzling". Moral of the story? buy the dip, you'll be glad you did.

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

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.