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Gamestop a Meme stock that is grossly undervalued
Gamestop was cheap at 17 dollars and expensive a 450 but if you look at pure asset value and current sales. It is easily a 200 dollar stock currently trading at 42 dollars.
Gamestop currently trades at only two times sales while the typical multiple for an internet company is seven times. With 2.7 Billion in assets and a 2.3 Billion dollar market cap you are getting their E-commerce gaming business for basically free.
Heavy short interest means another short squeeze could be coming but even without one you have a massive sale. Gamestop was hit hard by the pandemic but it has several positive drivers for its turnaround.
They have an established gaming brand, heavy insider ownership and a recent 12% increase in insider buying all are bullish signals. Some other positives include leadership changes including former senior leadership at Chewy.com.
Even without any turnaround progress the stock is a 130 dollar value worst case but that feels extremely pessimistic. The insider and institutional buying tells me I am not the only one that thinks the stock is dirt cheap.
We have Gamestop rated as a strong buy with a 200 dollar price target in our opinion now is the time to back up the truck.
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AMC Entertainment Holdings, Inc., through its subsidiaries, involved in the theatrical exhibition business. The company owns, operates, or has interests in theatres. As of March 17, 2020, it operated approximately 1,000 theatres and 11,000 screens in the United States and internationally. The company was founded in 1920 and is headquartered in Leawood, Kansas. AMC Entertainment Holdings, Inc. is a subsidiary of Dalian Wanda Group Co., Ltd.
AMC is a known consumer brand with a long and proud history but physical retail is dying. Very few physical retailers can maintain profitability and AMC is burdened with nearly 11 billion dollars in debt, negative cash flow and a paltry 92 million dollars in revenue. AMC stock looks cheap compared to 2019 financials, but this is fool’s gold.
If they had a much smaller debt load I could see an argument for holding some AMC stock and hoping for a turnaround but they are burning 300 million in cash a quarter and could be out of cash with no way to make debt payments by this summer. That is a recipe for bankruptcy which would wipe out any modest hope of shareholder value.
AMC could also dilute shareholder’s by issuing shares but thus far they have shown no desire to do that. Much like someone slowly bleeding to death who has accepted they are gone and doesn’t see a point in prolonging their suffering this seems to be the attitude of AMC management. They have accepted bankruptcy is coming and I feel terrible for anyone trying to convince themselves AMC stock still has value.
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RMCF or Rocky Mountain Chocolate Factory is not a sexy investment. They make chocolate and chocolate related products. They don’t have explosive growth or flashy new technology. Honestly they are kind of boring. Sometimes that can be a good thing.
They boast strong cash flows, a meaty 8% dividend and solid albeit not explosive growth. They are small enough to have plenty of room for growth but rarely ever use heavy leverage and take on minimal debt. If your looking for the closest thing to risk free this is probably it. (Note it’s still a stock risk of total loss exists just feels minimal.)
If you seek safety, income and the smallest amount of risk possible in the stock market Rocky Mountain Chocolate Factory is worth considering. We currently have a buy rating and price target of 10 dollars a share.
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On the surface Naked brands looks like another struggling company selling for a little over a dollar. Naked has been crushed by the pandemic forcing them to pivot and change their business model on the fly.
What is truly mind blowing is there is a real argument for a long term share price of fifteen dollars. Naked has some of the top brands in Australia, it's not a huge stretch to value these at five dollars a share, Fredericks Of Hollywood we also value at five dollars a share.
Their remaining assets include 59 million in cash and several other niche brands we gave these an estimated value of five dollars. Keep in mind none of this includes their business which is being transitioned to pure E-commerce. The potential is compelling will the turnaround be executed successfully?
We rate Naked Brands Ticker NAKD a strong buy with massive upside potential.
Disclosure Our CEO is Long NAKD stock