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Madam, your child is ugly - BIG

|Includes: Big Lots, Inc. (BIG), DG, DLTR, FDO

Every school has a handsome quarterback. Every school has a beautiful prom queen. And every school has a weird kid everybody ignores with curly red hair, misshapen teeth and a white shirt with a broken button two sizes too small for his too fat tummy. With good luck, he'll become a computer programmer and do an IPO. With bad luck, he'll appear on Wanted posters in federal buildings all over the US.

Big Lots is the red headed kid. It has trouble getting respect in the discount business like Dollar Tree, Dollar general or Family Dollar. It rarely gets mentioned when they do.

It rejected a take-over bid which lead to an ugly sell off. It missed earnings after its acquisition of a Canadian chain and sold off again. Its price has only slowly come back.

BIG's just got a "Buy" recommendation from a brokerage firm as an undervalued discounter with a price target about 50% above current levels. The broker thinks BIG's margin pressures are from changing over to more consumables like toothpaste and less furniture. Consumbles build traffic and make for repeat customers. With good luck....

Long here.

Just my opinion.


IBD Industry Themes - Will Big Lots Be The Dollar Store Phenom In 2012?