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.

Mark Boyar: Net/Net Pioneer

Long before I started this site, or even knew what a net/net was, deep value legend Mark Boyar, who currently runs Boyar Asset Management, the Boyar Value Fund and an excellent independent Research Product Focus Asset Analysis, offered a newsletter devoted to the subject. I was still in elementary school at the time, while Boyar was devoting a considerable amount of time identifying net/nets, and building a business during an extremely difficult period. It certainly was not as easy in those days as it is now to identify net/nets. There was no software, no Bloomberg or Factset, or even electronically filed SEC documents to make the task easier. It was all done by hand.

Today, Boyar and his analysts provide an excellent, in depth research product. Their recent report on International Speedway Corporation provides a fascinating look at a company that few other research providers cover.

For more on Mark Boyar Integrity Research just published an interesting piece on his career.

*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Steak n Shake Update

Last September, we posted a Guest Blogger's take on Steak n Shake. The story has gotten even more interesting since then, and you can read my recent column that appeared on RealMoney and Yahoo Finance.

Since my piece ran earlier this week, the company announced its intention to acquire a small insurance company Fremont Michigan InsuraCorp Inc (FFMH.OB), which was rejected this morning by Fremont.

Stay tuned..

*The author has a positions in Steak n Shake. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Top Five Net/Nets to End 2009

It's hard to believe 2009 is almost behind us, and what a year it has been. Our own Cheap Stocks 21 Net/Net Index is currently flat since it's February 2008 inception. We'd hoped hoped for better performance, but this little index of misfits has performed better than the Russell Microcap Index, which is down about 20% during the same timeframe.

We plan to wind down CS21 once it hits the two year mark, and will replace it with a new net/net index.

We thought that there was no better way to say goodbye to 2009 then with a list of the current top five net/nets in order of market cap. Some of these names may look familiar to you, in fact one of them, Audiovox(VOXX) seems to have had a permanent place on the list.

Top Ten Net/Nets by Market Cap


Imation Corp(IMN)
Price: $8.78
Market Cap: $334
NCAV: $399.3
Cash: $111
P/E: NA
Mkt Cap/NCAV: .84

Movado(MOV)
Price: $9.22
Market Cap: $226
NCAV:$304
Cash: $49.5
P/E: N/A
Mkt Cap/NCAV: .74

Audiovoxx(VOXX)
Price: $7.39
Market Cap: $169
NCAV: $210
Cash: $70.5
P/E: NA
Mkt Cap/NCAV: .80

Opnext(OPXT)
Price: $1.86
Market Cap: $165
NCAV: $196
Cash: $155
P/E: .84
Mkt Cap/NCAV: .84

Axcelis Technologies(ACLS)
Price: $1.26
Market Cap: $131
NCAV: $173
Cash: $41
P/E: N/A
Mkt Cap/NCAV: .76

Merry Christmas, and happy holidays!

*The author does not have positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Biggest Net/Nets In Years: One Year Later

This time last year, our piece Biggest Net/Nets In Years featured an interesting list of names. Truth is, we'd rarely, if ever seen net/nets of this size, and it was the direct result of a free falling market. We thought it would be interesting to review the performance of these companies one year later:

Ingram Micro
Ticker: IM
Price Then: $13.58
Price Now: $18.69
Change: +37.6%

Tech Data
Ticker: TECD
Price Then: $21.47
Price Now: $41.88
Change: +95.1%

Benchmark Electonics
Ticker: BHE
Price Then: $11.77
Price Now: $18.00
Change: +52.9%

USEC
Ticker: USU
Price: $3.90
Price Now: $4.09
Change: +4.9%

Furniture Brands Intl
Ticker: FBN
Price: $4.61
Price Now: $3.61
Change: -21.7%

The average return for these companies was 33.76%. During the same period, the Russell 2000 was up 15.9%, the S&P 500 17.5%, and the Russell Microcap about 10.4%. Hindsight, of course, is indeed 20/20, but the land of the nets/nets continues to be an interesting pond in which to fish.

*The author does not positions in any of the companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

JG Boswell Fundamentals

We've reviewed 7 years of data, crunched a lot of numbers for JG Boswell, and have been able to string together seven years worth of summarical fundamentals. Due to the complexity, and growing size of our spreadsheet, we've decided to share just some of the data that will put BWEL's current valuation in perspective.

JG Boswell (BWEL)
7 Year Averages Based on Annual Data:
P/E: 28.6
Price/Sales: 1.61
Price/Book Value: 1.44
Net Margin: 7.52%
EV/EBITDA: 9.88
Dividend Yield: 2.29%
Market Cap: $605 million
Enterprise Value: $722 million

Current Data (2009 Annual)
P/E: 21.5
Price/Sales: 1.4
Price/Book Value: 1.06
Net Margin: 6.56%
EV/EBITDA: 8.45
Dividend Yield: 2.89%
Current Market Cap: $473.5 million
Current Enterprise Value: $630 million

We are also contemplating putting the full seven years of financial statements into excel, and distributing these to anyone willing to submit $100 to our paypal account. We've never charged for anything before, but this will be fairly labor intensive, and we're just not sure it's worth the effort. Cheap Stock readers can be the judge on this one.

If you have any interest, please contact us at:cheapstocks@verizon.net

Many thanks to Tim Eriksen of Eriksen Capital Management, who was kind enough to provide us with some of the earlier Boswell data.

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

JG Boswell Update: 2009 Annual Report

Shares of cotton and farming giant JG Boswell, owner of an estimated 142,000 California acres, and another 30,000 in Australia, are in positive territory year to date in 2009, up 14% excluding dividends. That's still down substantially from $1000 range the Company briefly touched in May of 2008.

The appeal of Boswell (BWEL) is not in its farming operations, which although impressive in their own right, merely represent the current use of assets which might ultimately be much more valuable used for other purposes.


As we've stated several times before, the real gem may lie beneath some of Boswell's land: massive amounts of water that may be worth several billion. ("May" being the operative word. Ultimately, in order for value to be realized, assets must be converted, or have a good probability of being converted into cash. Water is a touchy and political subject, especially in California, and given dire predictions about California agriculture by officials in the new administration.)

The Company held it's annual meeting last month in Pasadena, and we recently obtained a copy of the company’s 2009 annual report. Here are the highlights for the year ended June 2009:

Current Price: $477
Avg 3 month volume: 430
Current Dvd Yield: 2.9%
Quarterly Dvd: $3.50/shr
2009 Revenue: $339.034 million (down 7.6%)
Net Income: $22.15 million (+45%)
Diluted EPS/shr: $22.51 (+46%)
Current Assets: $303.407 million
Cash: $2.066 million
Total Assets: $800.701 million
Current Liab: $282.139 million
Short Term Debt: $158.630 million
Long Term Debt: $0
Stockholders Equity: $444.817 million
Shares Out: 976,301
Book Value Per share: $455.6
Market Cap: $455.61 million
Enterprise Value: $612.18 million
Enterprise Value/California Acre: $4311 (estimated)

2009 revenue fell 7.6% to $339 million, while net income jumped 45% to $22.70 (fully diluted). Boswell ended the year with $158.6 million in short-term debt and no long-term debt. Shares currently trade at book value, and yield 2.9%.

Based on just the California land, we estimate Enterprise Value/Acre to be about $4311, and that ignores any value in the Australian land. We continue to be intrigued by the Boswell story, especially at these prices. Buyer beware, though: Shares are difficult to obtain, information is scarce, and there is little liquidity.

Many thanks to Jack Norberg, chairman of Standard Investment Chartered Inc., of Costa Mesa California, who we consider to be one of the foremost experts on high quality pink sheet stocks. Jack attends the Boswell annual meetings, and has been a great help with data, and as a sounding board on ideas.

We've also been compiling Boswell data for several years now, and will be posting 5 years of fundamental data for Boswell in the near future.

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