Ugly Stock Returns with Deep Value Attributes

TAST: Carrols Restaurant Group (Price on 04/15/13 = $4.74)

Carrols Restaurant Group, Inc. is the largest Burger King franchisee in the world and have operated Burger King restaurants since 1976. As of December 30, 2012 , they operated 572 Burger King restaurants in 13 states. On May 30, 2012, they acquired 278 restaurants from BKC.

Carrols saw third quarter sales increase 87% to $169.5 million, thanks in large part to the acquisition of 278 additional Burger King restaurants. Carrol’s is a key beneficiary of Burger King’s goal to be 100% franchised. BK’s emphasis on coffee sales should also help increase the average meal cost. Carrols/BK’s coffee offering/emphasis of Seattle’s Best , a 2003 Starbuck’s acquisition, should help margins as they push coffee sales.

GMAN: Gordmans Stores (Price on 04/15/13 = $11.25)

Gordmans Stores, Inc. is an everyday value price department store retailer. As of March 25, 2013, the company operated 86 stores in 18 states. Gordmans Stores, Inc. was founded in 1915 and is headquartered in Omaha, Nebraska.

GMAN has a solid balance sheet with virtually no debt. It trades at a strong valuation discount to its industry peers but posted a -48.08% 52 week stock return.

COCO: Corinthian Colleges Inc (Price on 04/15/13 = $1.92)

Corinthian Colleges, offer short-term diploma programs and associate, bachelor's, and master's degrees. Their main program areas include health care, criminal justice, business, information technology, transportation technology and maintenance, and construction trades. In addition, they offer online degree for business, accounting, criminal justice, paralegal and information technology. As of June 30, 2012, they had approximately 91,000 students and 15,200 employees, including 5,900 faculty of which 4,170 are part-time and 1,730 are full-time.

Note the large short position at 30% of float. So caution is warranted.The stock is a mean reversion candidate with a -47.58% stock return for the prior 52 week period. The entire for profit education sector is under pressure from litigation and future government funding.

Education & Training Services 

ABFS: Arkansas Best Corporation (Price on 04/15/13 = $10.14)
Arkansas Best Corporation provides freight transportation services and solutions. As of December 31, 2012, the company operated approximately 3,700 tractors and 20,000 trailers that were used in its line haul and local pickup and delivery operations. Arkansas Best Corporation was founded in 1935 and is headquartered in Fort Smith, Arkansas.

ABFS is trading at a discount to its historical valuation. Valuation also trades favorable to industry peers posting one of the worst 52 week stock returns.

Trucking Industry comparisons

SPPI: Spectrum Pharmaceuticals (Price on 04/15/13 = $7.01)

Spectrum Pharmaceuticals, Inc., a biotechnology company, engages in acquiring, developing, and commercializing prescription drug products primarily in the areas of hematology and oncology.
The company was formerly known as NeoTherapeutics, Inc. and changed its name to Spectrum Pharmaceuticals, Inc. in December 2002. Spectrum Pharmaceuticals, Inc. was founded in 1987 and is based in Henderson, Nevada.

AGX: Argan Inc (Price on 04/15/13 = $14.55)

Argan, Inc., provides development, consulting, engineering, procurement, construction, commissioning, operations, and maintenance services to the power generation and renewable energy markets for public utilities, independent power project owners, municipalities, public institutions, and private industry.
Argan, Inc. was founded in 1961 and is headquartered in Rockville, Maryland.


CH868 said...

GMAN is intriguing to me. I skimed through the 10K but can't find anything that contributed the down fall of the stock price. By the way, are you able to find the latest 10K which ended at the end of January 2013? I went to Edgar but it was not there.

ShadowStock said...

Yes the latest GMAN 10k was filed 4/17/2013 for the year ended 02/02/2013. since the company was founded in 1915 I was hoping to find valuable real estate on the books at historical cost. No real estate :(