Cabela's [NYSE:CAB] Closing price 12/21/07 = $14.28 52 week range: $13.89 - $28.80
Cabela's is a leading direct marketer and in-store retailer of hunting, fishing, camping and general outdoors merchandise. They operate 18 regional superstores plus they sell over the internet and through catalogs.
These shares came public in 2004 and traded as high as $30.30 that year while earning $1.03 per share. Since then the EPS have climbed steadily. They hit $1.10 and $1.29 in 2005 and 2006 and are expected to come in at $1.40 for the year ending this month.
Despite these steadily growings earnings [and sales growth to match] CAB shares have sunk to near their all-time low price. At today's $14.28 they trade for just over 10X trailing earnings and less than 9X next year's concensus estimate of $1.62.
Historicaly CAB shares have been 15X - 20X earnings and at peaks hit 30X, 22X, 20X and 20X in each year 2004 - 2007 respectively. A return to just a reasonable 17X next year's estimate leads to a 12-month target price of $27.54 or + $13.26 [up 92.8%] from Friday's close.
Is a $27.54 goal reasonable? These shares actually traded at $30.30, $23.40, $26.00 and $28.80 in each calendar year 2004 - 2007 [on lower sales, cash flow, earnings and book value than today's numbers.
Barrons wrote a positive story on Cabela's a few months back at a much higher price point. I think the recession concerns have been over reflected here and that the risk-reward looks exceptional.
With CAB shares near their all-time low absolute price and also at extremely depressed valuation levels I am a buyer right here. There have been multiple insider buys on CAB shares since September [including 5 in November] with the pace accelerating as the shares have gotten cheaper. All the buys were at prices higher than today's quote.
This looks like a perfect 'January Bounce' candiidate as it has been trashed by tax-loss selling and by portfolio managers who do not want to fess up to owing a poorly performing stock on their year-end portfolio reports.
Cabela's is a leading direct marketer and in-store retailer of hunting, fishing, camping and general outdoors merchandise. They operate 18 regional superstores plus they sell over the internet and through catalogs.
These shares came public in 2004 and traded as high as $30.30 that year while earning $1.03 per share. Since then the EPS have climbed steadily. They hit $1.10 and $1.29 in 2005 and 2006 and are expected to come in at $1.40 for the year ending this month.
Despite these steadily growings earnings [and sales growth to match] CAB shares have sunk to near their all-time low price. At today's $14.28 they trade for just over 10X trailing earnings and less than 9X next year's concensus estimate of $1.62.
Historicaly CAB shares have been 15X - 20X earnings and at peaks hit 30X, 22X, 20X and 20X in each year 2004 - 2007 respectively. A return to just a reasonable 17X next year's estimate leads to a 12-month target price of $27.54 or + $13.26 [up 92.8%] from Friday's close.
Is a $27.54 goal reasonable? These shares actually traded at $30.30, $23.40, $26.00 and $28.80 in each calendar year 2004 - 2007 [on lower sales, cash flow, earnings and book value than today's numbers.
Barrons wrote a positive story on Cabela's a few months back at a much higher price point. I think the recession concerns have been over reflected here and that the risk-reward looks exceptional.
With CAB shares near their all-time low absolute price and also at extremely depressed valuation levels I am a buyer right here. There have been multiple insider buys on CAB shares since September [including 5 in November] with the pace accelerating as the shares have gotten cheaper. All the buys were at prices higher than today's quote.
This looks like a perfect 'January Bounce' candiidate as it has been trashed by tax-loss selling and by portfolio managers who do not want to fess up to owing a poorly performing stock on their year-end portfolio reports.
