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Thursday May 18th 2006
'Profit in
Store'
SHLD
(SEARS HOLDINGS CORPORATION )
Most retailers only
care about abasing themselves before mighty Wall Streeet
analysts. The vast majority of co.s is just trying to keep
the Street pleased and happy!
They run their business
- sometimes into the ground - just to keep a bunch of powerful analysts
smiling.
Retailers will do
anything to grow their same-store sales. It's the key
metric. It's the one thing that the Street really cares
about. But, at the end of the day, there's more to running a
business than good same-store sales.
What would happen if,
instead, somebody out there did something totally
revolutionary? What if they ran a retail chain, not for
same-store sales, but for profit! What if you just tried to
return the capital to the investors?
I've been adament that
if you could just get one of these co.s to do that, then you'd have the
next Berkshire-Hathaway!
I think you would have Sears Holdings (SHLD)!
This is still - even
after today's unbelievable, humongous gain - the best story out
there! Buy, buy, buy!
Yeah, even after
today's qtr. - after the stock jumped - I still think it's not to late
to buy SHLD.
It's a $200 stock
masquerading as a $155 stock.
ADVERTISEMENT
Yesterday, I said that OII had beat their qtr. more
handily than any other co. this time around. That changed
today. SHLD has now reported the biggest
beat for the last qtr. The street was expecting 64 cents a
share; SHLD reported $1.14!
But that pesky
same-store sales number wasn't great.
With retail, we've been
tricked into thinking that same-store sales are all that matter.
This story is bigger
than just cost cutting. Sears take their profits and, during
the last qtr., they bought back 3.3 million shares. This is
the only buyback 'mon-back in the marketplace.
They can buy back
another $497 million in shares on this authorization alone, and I bet
they will; they paid $125, they'll pay up here.
The co. is sitting on
$3.2 billion in cash. Those stores don't need that
money. I think they'll keep buying back shares. I
think they'll buy them hand over fist.
These buybacks boost
the earnings per share by decreasing the number of shares.
Think about denominator okay - that's just simple arithmetic.
The bottom line!: SHLD is one
retailer that's more concerned with making you money than with
prostituting itself to the critics, the short sellers, the so-called
analysts on the street. I think it's a buy!"
