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Hooker Furniture Corp. Message Board

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  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    I havent done the full DD on GTAT that I would do if i was considering entering a long position. This is because the financial multiples are well above where I would ordinarily consider a long investment. Price to book is currently 7.5x, which is considerably high and this is based on today's price after a significant move off of the high. It almost unheard of to see such a high multiple of book on a company not making any profit.

    GTAT is calling for profits of a $1.50 per share on a nonGAAP basis in 2016. I generally prefer to see companies provide guidance in GAAP terms but wont automatically throw it away if they use nonGAAP. It's all about what they are removing or including between GAAP and nonGAAP earnings. Generally i dont care if they are excluding goodwill writeoffs as i feel the goodwill is already represented in the earnings number. However, adding back share-based compensation or interest on debt is just deceiving investors to sell them on a higher profit number. If I was considering a long investment, this is one of the first things i would dig into. Right now I dont really know what their GAAP to nonGAAP adjustments include.

    The next question I'd ask is how much more costly is a Sapphire screen compared to a traditional Gorilla glass screen. If Sapphire screens are more expensive to manufacture and will cost more to implement, will they be able to pass that cost off to the consumer or will Apple have to eat those additional costs through their profit margins.

    At the end of the day and over the long term, stock values are based on profits and how the book value of a company is expected to grow over time. While Sapphire screens sound great for the consumer, I expect Apple to continue to maximize profits of each unit sold.

    At this point IMO GTAT is strictly a momentum play and I don't see any value in the name. This could change as the stock price gets cheaper.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    Bull, any sense of what that gtat might actually be worth? Hard to believe they gave away the farm just to get in bed with aapl, their sapphire is apparently in the watches. I've got a hunch there will be a iP6S (s for sapphire this time), wild card idea maybe even by Christmas. (iPhones with pristine sapphire screens will sell well in the used market, up-graders always want to upgrade anyhow, I think the sapphire screens actually might help build the total # of iPhones in service that way, a semi "forever-phone" that doesn't really cannibalize (damaged/old) replacement sales much. Just a thought.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    I agree with you there. I dont like to short either due to the potential of infinite losses so I only use puts as well.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    You're right of course, options are a suckers bet because of (impossible to) timing. But so far at least (40 years of this) I never short outright, for the standard reasons, so if I want to dabble (October Insurance?) a little on the short side, PUTs it is. But its gambling for sure, zero sum stuff.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    Have you looked into puts on SCTY? That company is flying just by being associated with Musk. Long term I expect a complete meltdown in that company. However, with options its more about timing than being right on the call.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    My guess is they'll just manage a product cycle here well enough for modest sales-earnings growth over the next year or three, plenty of pent up demand for iP6s. My 25 year old an example: Doesn't care about Apple, BUT he'll ditch his Android now for iP6, probably the big one. And I wouldn't be surprised to see him with the watch a year from now. I don't see enough honest growth / market mania for AAPL to be a 2X thing, but stranger things have happened. What I think I see is minimal downside, 2% yield that assume will get boosted (div amount boosted), low risk shot at 10-20% over the next year, even if the Fed starts to hike. JMHO, what I really want now is for hyped-greater-fool TSLA to run out of fools! (that's the gambling corner :-) assume "they" want more aapl, only negative they seem to have is "wheres China deal?", so I'm waiting for some "exploding battery" story, some such, for a possible discount op.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    As great as Apple is, a double would make them a trillion dollar company. Apple's stock price is all about the iphone and in particular the margins on the iphone. They've been able to maintain phenomenal margins so far, mostly on the back of phone company subsidies. The competition will only get stronger and I doubt the sustainability of phone company subsidies long term. Apple is at a crossroads where they need to decide between market share and profit margins. Last time around (Personal computer revolution) they went solely for profit margins and lost big time to Microsoft. They've caught lightning twice sorta speak and it will be interesting to see how they go this time.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    bull, not really sure I do "plays", write some over on the wtt where been a long-timer (since sub 30 cents), don't do options except very rarely in the "gambling corner" of the portfolio, and, ha, by-golly, tsla $250 PUTs kicked in today, Oct18s and Oct24s. been averaging up on $70 aapl since iP6, pretty close to no-brainer I think, as in make 10-30% in a year or two, with a dividend and aapl could do another double as this product cycle develops. (see any real downside to $100 aapl, with a 2% dividend?) agreed with you on GTAT, in the Apple world "all-profits-belong-to-Apple", no? Cheers, nm

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    I'm not a fan of GTAT at all. Its a classic one-trick pony thats been bid up to the sky in anticipation of the iphone event. Considering Apple bought their factory for them, its hard to imagine that even if Sapphire was adopted that margins would be big enough to support the current stock price. The only real hope for longs is that Apple decides to take them out to control production (IMO of course). What other plays do you like? I'm currently playing FSLR and LF.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    Agreed, just a nice quiet thing with a far better than bank i rates div. They could certainly dump Homeware and help the bottom line and CF, but I'm glad they're experimenting. You're paying attention to gtat? Same here, sure was being hyped big, got a friend who insisted on playing with options there, cost him (as usual). Got a hunch that when the 6S comes out, S might mean sapphire, but thats tbd. And even if it does, how does that show up as CF for gtat?

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    Yes it sits quietly in my portfolio. They appeal to the young non-ikea crowd as well as providing furniture for senior living facilities. Quietly performs and trades close to book value. Long term I expect the company financials to outperform their current stock price.

  • Reply to

    Homeware anyone?

    by nmoil Sep 2, 2014 10:13 AM

    HOFT message board pd quiet, just waiting for 10Q I guess. re "the group", lzb would suggest weakness to be expected, but maybe the growth initiatives (like HomeWare net sales) are kicking in? TBD.

  • Anybody have any feel for how the Homeware "experiment" is doing? To my untrained eye it looks like it has potential: Marketing (on-line) to age 20-30 urban women who want other than Ikea. HOFT overall, quiet growth story with a decent dividend, that was able to weather the "end-of-the-world" (2008-09) fairly gracefully. Linked to the OK housing recovery that is on-going, imo.

HOFT
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