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July Value Idea Contest Winner Announcement

July 09, 2012 | About:
guruyt

GuruFocus

370 followers
In order to encourage more idea sharing GuruFocus hosts a monthly value idea contest. We will reward qualified value idea submissions $1000 if the idea double in 12 months. Qualified authors will also receive $100 per submission. The submissions will be evaluated monthly. These are June’s submissions:




These are the scores that the submissions received in different areas:

Contest July 2012 Symbol Business Quality Financial Strength Management Analytical Depth Undervalued? Presentation Comments Total
McDonald's - Buy and Hold Until a Rainy Day MCD 4 4 4 5 4 4 3 28
The Buckle Quietly Sets the Bar for Retail Success BKE 4 5 4 4 3 4 3 27
Value Idea Contest Submission: J.C. Penney JCP 3 3 4 5 4 4 4 27
A Great Company at a Graham Price – Gigaset AG ARGTF 4 4 3 4 4 4 3 26
Sycamore Networks: A Lottery Ticket That Pays You SCMR 2 5 4 4 4 4 3 26
Hillenbrand Inc: Rising from the Grave HI 3 3 3 5 3 5 3 25
Macy's, an Improving Story M 4 3 3 4 4 4 3 25
TFS Financial Corp. (TFSL) - $9.50 TFSL 3 4 3 3 4 3 3 23
AutoNation and Archimedes AN 3 2 4 4 3 4 1 21
Delhaize Group - A Supermarket Chain with an Attractive Yield & Single-Digit PE DEG 3 3 3 3 3 3 1 19


Therefore, the performances of the top five qualified ideas (those will score of 26 or up) will be tracked. The authors will be paid $1000 if their ideas double. Each of them also received $100 for the submissions.

These are the comments on these submissions.

McDonald's - Buy and Hold Until a Rainy Day

An in-depth discussion of McDonad's!

The Buckle Quietly Sets the Bar for Retail Success

High quality retailer. Good growth, no debt. Expanding margins. This kind of company will never be very cheap. A discussion of management, financial strength of the company will make the case stronger.

Value Idea Contest Submission: J.C. Penney

The struggling retailer is traded at close to multi-year low. A turnaround story that still needs to be proved

A Great Company at a Graham Price – Gigaset AG

An interesting small cap idea.

Sycamore Networks: A Lottery Ticket That Pays You

A Net-net play.

Hillenbrand Inc: Rising from the Grave

A great and deep analysis of a complex business. It may not be a good investment now. But the work the author has done is a great help for someone who is interested in the company.

Macy's, an Improving Story

A retailer struggling with growth. The debt burden is quite heavy. Though it looks cheap on EV/EBITDA basis, but EDITDA has a strong dependence on the economy. Other valuation methods will help, too.

TFS Financial Corp. (TFSL) - $9.50

A small S&L traded at below book value. It will be nice if the author discuss more about the quality of loans, management etc.

AutoNation and Archimedes

The macroeconomic trend is favorable for the car dealer. The number of car dealers has been in declining. Strong share buyback. Discussions of valuations will be appreciated. The business performance relies heavily on a lot of external factors such the interest rate, the economy etc.

Delhaize Group - A Supermarket Chain with an Attractive Yield & Single-Digit PE

Retailer with declining margins. Traded at 5-year low. Debt burden seems to be heavy. Author is expected to discuss areas such as management, business quality, financial strength etc.

Iconix Brand Group Inc. (ICON)

Not qualified because it has been submitted within the past 6 months.

I Want (BT)U

The Analysis did not cover the required areas such as management, financial strengths of the company. DCF calculation can hardly be applied to a cyclical business like this.

The performances of the contest submissions are tracked here.

Performance Review

Among the ideas submitted in April and May, KWK gained 22%, the most among all submissions. QUAD (see A Great Company at a Wonderful Price in a Terrible Industry - QUAD) gained 19% even as the market declined significantly. Leucadia (LUK) (see Value Contest Submission - Leucadia) has lost almost 12% since submitted in April. FLIR and ONE lost 14%.

The contest is open for July. The deadline for each month’s submission is the end of the month. Please submit to win $1000.


Rating: 3.4/5 (10 votes)

Comments

V Investor
V Investor - 2 years ago
DCF calculation can be applied to a cyclical company, just conservatively. You obviously aren't going to get it right every year in the future. The overall difference in valuation from assuming cyclical swings and a linear progression is not huge. What really matters is the dependability and permanence of the industry. Valuation is an imprecise process in the first place.

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