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March 2011



Rite Aid needs more than a band-aid

March 14, 2011 – Comments (4) | RELATED TICKERS: RAD , WBA , CVS

Rite Aid Corp is sporting a Long Term Debt to Cash ratio of 62 to 1 with negative earnings and cash flow for as far as the eye can see. How do they survive? Again 6.2 billion in long term debt versus 100 million in cash. Imagine the dilution that would need to take place at $1.11 per share to pay down the debt? With 887 million shares outstanding, reducing LTD through a new equity offering at market price would send the stock into the basement. Even if they double the share count, this would reduce long term debt by 984 million or only 16%.   [more]



An updated take on a core Buffett tenet

March 08, 2011 – Comments (4) | RELATED TICKERS: ISRG , CRM

The need to understand the business you are investing in, for it to be tangible, and easy to describe to a layperson has been cited by Warren Buffett as a core principle in his investing decision making process.  [more]



Sizing up Joe's Jeans

March 02, 2011 – Comments (5) | RELATED TICKERS: DFBG , TRLG.DL

Joe's Jeans (JOEZ) is well fitted to join the undervalued club at $1.08 with an analyst earnings estimate for .13 cents for 2012. At today's levels we are looking at a forward P/E of 8.3. The latest earnings conference call highlighted that managment was confident that higher cotton prices would not be material since they can be passed onto the customer. Joe's sells high end jeans and apparel primarily over $100 making them less vulnerable to rising commodity prices.  Also management noted on the call that cheaper sourcing is due to come online in the near future from a new country.  [more]

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