Saturday, 16 October 2004

Company Update

Circuit City

Ticker: CC

Current Price: 11.87

Up 159 percent

Since our initial report on this company (2/8/02), Circuit City shares are up 159 percent. Consequently, the stock no longer trades below it's net current asset value. As an NCAV investor, that's what you hope for. A rising stock price, once the market catches on to the true value of an NCAV company, lifting the company above it's NCAV.

Circuit City still looks healthy. The company's balance sheet boasts nearly $5 per share in cash, with little debt to speak of. Still the retail electronics market remains highly competitive. The company sold off it's credit card operation in January 2004 (deal completed in May 2004) for $1.8 billion, allowing it to concentrate on the core business.

Second quarter sales were up $190 million to $2.345 billion from the same quarter last year, resulting in earnings of 2 cents per share, up from last years loss of 15 cents. They key quarter for this company is the fourth quarter, ending in February. That's high season for retailers, make or break time.

Keep an eye on this company. As an NCAV investor, the objective is to identify companies offering tremendous value at a given price. If the market finally recognizes value in that company, lifting the share price, you need to re-evaluate. In order to protect your profits, consider instituting a stop loss on your shares. As the stock price rises, you can increase the stop loss price. This will help you protect your downside in the event of severe price decreases.

No comments:

Post a Comment