FreightCar America (RAIL) has a market cap just over $600 million, a pre-tax Earnings Yield of 46%, and a pre-tax Return on Capital over 100%.
The company makes railroad cars, primarily for carrying coal. Coal production, and therefore, orders for new railcars, is down recently. However, new coal-burning plants are coming online soon and aging railcars will need to be replaced with FreightCar's new lighter aluminum cars that can carry more coal. There's also the potential for sales to China.
RAIL pays a nominal annual dividend of $0.24/share, and its shares are currently $50.26, giving a yield of less than half a percent.
Monday, July 09, 2007
Sunday, July 01, 2007
Cherokee in the Bargain Bin
Cherokee (CHKE) has a Pre-Tax Earnings Yield of 9%, a Pre-Tax Return on Capital of over 100%, and a Market Cap of $325 million. It licenses clothing brands to retailers such as Target (TGT) and has high gross margins.
It dropped significantly from $48 to just over $36 last month and is now at $36.54 per share. It pays an annualized dividend of $3, or 8.2%, at the current price. The recent drop is due to a decline in profits and loss of 2 licensing agreements for Mossimo and Carrefour, giving us a buying opportunity until these revenues are replaced. Director Jess M. Ravich recently bought 15,000 shares at $37.93, more than doubling his stake in CHKE.
This looks like a classic Magic Formula stock, a great company that is temporarily out of favor.
It dropped significantly from $48 to just over $36 last month and is now at $36.54 per share. It pays an annualized dividend of $3, or 8.2%, at the current price. The recent drop is due to a decline in profits and loss of 2 licensing agreements for Mossimo and Carrefour, giving us a buying opportunity until these revenues are replaced. Director Jess M. Ravich recently bought 15,000 shares at $37.93, more than doubling his stake in CHKE.
This looks like a classic Magic Formula stock, a great company that is temporarily out of favor.
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