As usual, here are the best investing ideas from the past few weeks:
Baskerville Capital is quickly becoming one of my favorite blogs. Kirkland’s (KIRK) has been a stock that has been discussed by numerous value investors and featured on ValueInvestorsClub.
On the most conservative estimates, the stock appears to be worth around $12/share, with an upside closer to $20 if it is assigned a similar EV/EBITDA multiple as its competitors.
More importantly, these intrinsic values are calculated with no growth priced in – if the company opens approx. 30 new stores per year, each should add EBITDA of approx. $230k.
A few weeks ago, the stock dropped almost 20% (below $11) on lowered guidance headed into the busy fourth quarter shopping season. Since that time, it has appreciated significantly and now trades near $14.
While I spend most of my time searching and investing in obscure microcaps, I am always on the lookout for well-written research and analysis. From SumZero, this article tackles a company that is anything but obscure – GM.
After a very public bailout and corporate restructuring, the stock has emerged with a much stronger balance sheet and cost structure.
Compared to Ford (F), GM trades at a significant discount to EV/EBITDAP (3x for GM vs 4.4 for Ford), and should benefit from a gradual rise on vehicle purchases after the lows of 2008/2009.
In addition to having the best spreadsheets out there, Jae Jun at Old School Value has been running a series of articles on helpful ‘How-tos.” This is a detailed post on how to perform a reverse EPV valuation by one of the readers at OSV.
This is especially helpful in determining if the current market multiple is reasonable, or if the growth projections are widely overstated. It is another great way to determine if stocks are being mispriced.
If you have links or suggestions to detailed analysis from other value investors, please drop me a line using the Contact Form.
I’m always open to ideas from other investors, especially for a thoughtful and well-researched investment articles.