1/02/2011

Distressed Deep Discount Idea

STLY (Stanley Furniture Company) current price $3.11

Market Capitalization = 32.17 Million
Enterprise Value = 60. Million


In the intelligent investor Ben Graham wrote “A sufficiently low price can turn a security of mediocre quality into a sound investment opportunity.” I believe STLY may be a candidate for this category.

In 2005 STLY had an average enterprise value of ~ $24 per share versus the current per share enterprise value of $5.82.The current book value is 5.61 with the price to book and price to sales trading at historical discounts. The book value is strongly supported by property and buildings purchased many years ago and sitting on the books below market value.

This mean reversion candidate has been hit hard with the housing downturn but still sits on strong balance sheet supported by cash per share of $1.63 and prior 12 months annual revenues of 14.43 million.2007 total liabilites have been reduced and share count was reduced compared to the TTM during this difficult period.

The details I provided are sparse but have been closely reviewed to justify the post. For 2011 my goal is to provide a continuous stream of value based ideas and at times the details will be limited. Hopefully the information will be useful in managing and developing your investment portfolio.

2 comments:

mosinvestor said...

STLY seemed like a good play to me too, but after looking a bit deeper I changed my mind. I recently posted a 2 part analysis:
http://mosinvestor.wordpress.com/2010/12/23/stanleyfurniture-perils-stdfinancials/

http://mosinvestor.wordpress.com/2010/12/28/stanley-furniture-no-margin-of-safety-in-this-armoire/

ShadowStock said...

good work; i will continue to try and introduce ideas that have value attributes in my opinion.

Some investors will doubt some or most of my ideas.

Thanks for the comments and good luck

John