Former Net/Net Tuesday Morning Soars

Closeout retailer and former net/net Tuesday Morning, that has graced the ranks of companies trading below their net current asset value for much of the past two years, was up 33% yesterday. The company reported better than expected guidance for Q2, suggesting eps of between $.40 and $.43 for the quarter. Same store sales rose, 5.1% versus the same period last year, and sales were up 6.2% to $289.6 million.

Given yesterday's jump, Tuesday morning is no longer a net/net, but still trades at just 1.12 times NCAV. However, that is based on first quarter balance sheet data, and Q2 won't be announced until January 26th.

If you've never been to a Tuesday Morning store, it is an interesting experience. I've referred to it in the past as a "rich man's dollar store", given the interesting mix of closeout inventory, at reduced prices. You never know what you will find at a store.

Founded in 1975, Tuesday Morning currently has about 850 stores in 45 states. With a current market cap of just $172 million, and almost identical enterprise value, these seem rather small for an 850 store chain. On an EV to store basis, that's just $200,000. The company does not, however own it's real estate.

I've owned shares a few times over the past couple of years, and the only reason that I've closed positions is due to trailing stops I've set. With the extreme volatility retail shares have experienced, stops seemed a prudent way to limit damage, but also lock in gains as shares rose.

I've been back in Tuesday Morning shares since mid December, and plan on seeing how events progress with the company (with a trailing stop to protect gains).

Tuesday Morning
Ticker: TUES
Price: $4.02
Market Cap: $172 million
Enterprise Value: $172 million
Net Current Asset Value (as of 9/30/2009):$153.6 million
Market Cap/NCAV: 1.12

*The author has a position in Tuesday Morning(TUES). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.