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ElCid16 (96.48)

Skullcandy finally gets a bit of positive news

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January 09, 2013 – Comments (1) | RELATED TICKERS: SKUL

Bloomberg reports that representatives from Royce & Associates and Roth Capital think Skullcandy makes an attractive takeover target since its 66% market cap loss in the past year and a half.  As a TRLG shareholder, I'm fairly skeptical of this type of takeover/buyout news, but nonetheless SKUL seems way too cheap right now.  FCF in 2011 was $20+MM, and could come close to $30MM for 2012.  I tend to like (virtually) debt free companies that are trading at a P/FCF of 7 or so.  Beats and Bose headphones sell for 2-5x what Skullcandy headphones sell for (so I wouldn't say they are direct competitors), and Skullcandy markets to kids and teens (they break stuff, they replace stuff).  Prior to investing, I actually bought a pair of their [less-flashy] earbuds just to make sure the product didn't completely stink and the sound is great.  I don't think this brand is going anywhere, anytime soon.

Long SKUL. 

1 Comments – Post Your Own

#1) On January 09, 2013 at 10:39 AM, Schmacko (91.86) wrote:

I just added them as a pick, before seeing this but after reading the same bloomberg article you mentioned. Link.

I'm not crazy about high end headphones as a long term play but I think there is good short term trade potential there.  Was hoping to get my pick in closer to the $6.5 bottom but it's popped on the potential buyout rumors... which I think are nothing but rumors at this point.

I have no real life position in the company, though I have been tempted.

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