Entering text into the input field will update the search result below

Is Barnes & Noble (BKS) a Book Store or "Technology Company?"

May 17, 2011 9:04 PM ETAMZN, GOOG, BKS, AAPL
EXPstocktrader profile picture
EXPstocktrader's Blog
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Long-Term Horizon, Biotech, Tech, Growth At A Reasonable Price

Seeking Alpha Analyst Since 2008

Formerly a Wall Street executive from a premier investment bank, and a Master's graduate from Harvard (magna). Author EXP's goal is to help investors discover stocks before the "crowd." The first article published was on "LNG" many years ago; an undiscovered gem. BLOG: https://seekingalpha.com/account/authorboard/instablog

This is not an easy business. Investing is psychological in nature and can be extremely taxing. Patience is key. Not all ideas are written about or picked for publication.

The goal is to try to identify current stock opportunities in the market that can produce some huge gains from disconnects in stock prices. These inefficiencies can be taken advantage of if you can properly identify opportunities, and then manage to act on them before the crowd.

EXP resides in the USA and is very thankful to followers worldwide.

You can also follow EXPstocktrader on: Twitter --- @WallStEagle     Email --- EXPstocktrader@gmail.com >>>

Disclosure: The administrator(s) of the services mentioned here may be long, short, or flat in any position mentioned as disclosed. All statements are made without any representation of its complete accuracy and administrator(s) are not compensated for posting notes by listed companies. Some minimal compensation is paid by SA if the article gets picked for circulation. EXP never takes money from companies to promote or write about a stock. All stock prices shown are approximate. Ratings may change at any time. All posts are for simulation purposes only. All stock trades transacted by you are at your own risk. We trade stocks and do not usually buy and hold indefinitely. Please take any information that you see here and consult your own investment advisor before making any real trades. EXP, EXPstocktrader and Seeking Alpha are Not licensed to give you investment advice based on your own personal suitability and risk tolerances. Please consult with your financial advisor before making any trades that you read about here or anywhere EXPstocktrader publishes information for that matter. Thank you.

Barnes & Noble appears to be the stock market's cheapest technology stock with a low price to entry of only $250 vs. an (AAPL) iPad or (RIMM) Playbook. The recent (GOOG) Android app upgrade doesn't hurt either. Last reported, the company has received over 1 million NOOK Android App downloads by NOOK Color customers, proving that they really do have a viable contender to the iPad or Motorola Zoom.

We have been watching this stock since it broke out in the $10 range and was alerted to the massive surge in options a few weeks ago which tells us that something is clearly brewing with this company! In addition, we have noted that the short interest has climbed to over 14,000,000 shares because some hedge funds may have felt that Barnes was headed in the same direction as Borders and may have regarded this company as a dinosaur.

Not so! Does Borders have a successful Color Nook or eReader or tablet? Barnes also just revised their billion dollar line of credit so their business growth looks in tact financially and another new eReader is set to be announced early next week. Oops, shorts have clearly miscalculated on this one!

On May 6, Barnes & Noble initiated with a Buy at Janney Capital with a $20 target. This might be too low? Some analysts say that to the right company looking to get into the tablet market, the color Nook could be worth billions to the right acquirer.

We strongly feel that $20 is very doable especially if Borders cannot find a complete buyer for all of their locations and Barnes ends up taking all of their physical book store marketshare. This would bolster their revenues considerably and help the company's surprisingly successful Nook e-reader/tablet and give it tremendous upside potential as noted by people in the industry. So where's their growth comoing from? Well, JP Morgan estimates that there will be about 48 million tablets sold in 2011 and 79.6 million sold in 2012 and Barnes is already gaining market share in the 28% - 30% range. 

Barnes is no longer just a brick and mortar bookstore chain, but has a technology element as well, so the valuation should rise YOY and should now be seen as becoming a technology company in the same mode as its competitor, Amazon.com (AMZN). It only makes sense!

Barnes & Noble is clearly a company to watch as their popular technological devices become even more popular with the hard back readers and tablet buyers. Keep watching! Barnes should continue to gain traction in the coming months.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.