I bailed today at $10.02 for a number of reasons. I still believe PBY will runup to $10.52 +/- before retrenching. I had a large position of stock that I sold but still have a six figure investment remaining in bonds. I plan to buy more bonds. The technicals on PBY and the addition of almost 2 million shorts in the past 6-8 weeks has been the main fuel. However, at current $10+ there will be a large number of people that short again once price stabilizes. I see PBY moving back down to a $7.50-$9.00 trading range and I will start accumulation again at the lower end of range for next runup. Here are my main reasons for developing pessimim:
1) I see insiders starting to sell again in the $10-12 range which will cast doubt.
2) With current runup, PBY is best candidate for Barrington to dump for future redemptions which will put pressure on stock.
3) Analysts are raising projections already and the 2 today alone raised the concensus from 10 to 12 cents for current quarter which is going to make it harder for PBY to meet or beat. They will surely now "blow away the numbers" as they did this time. I might suggest they may not make them.....
4) They did $496.5 million in sales this quarter and $502 million last year in current quarter. I am now assuming flat sales based on conference call which means about 1% more in sales in total than last quarter which for all practial purposes is the same.
5) They earned 3 cents in 2nd quarter last year. They earned 9 vs 1 cent this year so one could conclude with volume only up 1% they will earn 10 cents this year and concensus is already at 12 centswhich would crash the stock in 3 months.
6) It will cost one time expenses to open the 4 new spoke stores end of this quarter.
7) The numbers this time impressed wall street. Not me. It is evident that O'Dell lied and they have not cut $5 million in expenses. With bond buyback, they should have earned at least 30 cents this quarter.
8) Shortest conference call wth PBY I can remember. Finished up 15 minutes early when the CEO and CFO clammed up.
9) Real estate values won't be unlocked for at least 12-24 months with 18-24 being more realistic.
10) A buyout will be only thing to get it above $12.....DaninFW
I usually find your remarks very insightful.. I think selling out at 10 is OK because of the rapid nature of the latest leg up and it is ready for a breather. But it will take a major market decline to get it back as low as 8 in my opinion. Most often stocks overreact in both direction , and I expect PBY to start moving up again in several weeks and think it is good to be on board and not miss out on the move. Waiting for 8 will leave you on the sidelines as PBY leaves the station. This is the buying opportunity in the low nines IMO. Sell out after the next leg up.
lower highs and lower lows.
tommorow it breaks $9. Today the familiar rise of the market pre fed meeting with the selloff post fed meeting like clockwork. The only thing keeping this market up is hope that the government can save us. Hoping the goverment can save us is like keeping the lights on for Jimmy Hoffa.
The rate of change of people bailing will accelerate as the breakdown progresses. Trading is so thin that a 100k share sell can move this stock a buck so anybody trading on margin can rapidly be placed in a margin call. We could see some serious drops as people run for the hills when this stock dives.
Good for you. Smart move . The fundamentals here are poor. Lucky they had debt to buy back. Cannot have declining sales forever. Those who talk of buyout of PBY are dead wrong - will not happen. Many said would happen in 2003 and then in 2006 and now again in 2009. Seems like a 3 year cycle but all strategics have passed on this and PBY looked better in both 2003 and 2006 than it does now. Need a new Board that is not focused on the quarter but rather on the long term health of the co. That is certainly not the Chairman and his hand picked current senior leadership team. When he goes (soon given that he is bailing on the stock) they should leave with him
I have never posted before here but I'v followed your advice for more than 6 months now bought in at 3.11 average and sold today at 10. What has been said just make sense by Dan Your The Man! 69125 shares less now but a nice tidy profit. Will be back for more.
I must say this is dissapointing to see but I hope that you will still be strapped in somewhat. I'm new to this game and have lurked for awhile but your insight has been invaluable to many of us.. Thanks.
I plan to get back in the stock as it moves lower. I have patience. I hope all of you make a ton of money. The best time to get back in may well be after next earnings report in 90 days. The way I looked at it when I sold was I saw $1 upside in next 30 days and $2 downside. The risk/reward ratio was not in my favor. I am also concerned that AAP, AZO and ORLY have all got hammered the past 2 days. I also believe the analysts are going to drive up real tough numbers this quarter and this isn't a management team to bet on short term. As others have pointed out, when the ocean rises it lifts all boats. For those that know this business as myself, the best 6 months of the year are March to August. I see about 10-12 cents this quarter and maybe 10-12 cents for the next 2 quarters combined for total EPS of 30-35 cents for the year with the lower number the most probable. That would give the current $10 price a PE of 28-35........for this year. It's worth a gamble again below $8 as we position ourselves for next year. I still believe the shorts are going to hammer this one big time when it tops out. The lawsuit just filed has the potential to cost PBY's 3 cents a share this year as well with the Atlanta Race Track. I kind of expect them to accrue for that in the next quarter or so as well. I have read the filings and IMVHO don't think PBY's has a leg to stand on in court. It again typifies the intelligence level of corporate and the BOD's. DaninFW
I have to agree with your price expectation. I was(& am) still hoping to see it test $10.50 before the correction. But I would expect to see it then pull back to around $8.50. As for your other reasons, I can't comment....as I am a Technical person rather than a Fundamentalist. I rely on a number of T/A charts.
Also, I trade Options exclusively. I took a large position Monday in the July $7.50 Calls and Oct. $10. Calls. Sold the $7.50's yesterday for 75% profit, but held the $10's. Hopefully we'll see one more bounce, then I'll close out those and wait for the correction. (If not, I'm still up about 65% on them anyway.) Then get back in, as several of my charts look like it could test $20. in the next few months.
>>>I bailed today at $10.02 <<<
You've been practically clairvoyant about the progression of the stock price, so yeah, it shakes me up a bit to read your near-term prognosis.
Personally, I'm terrible at moving in and out of positions so I typically stand still like a guard at Buckingham Palace and suffer the bad weather --- not that this is optimum behavior but I'm stuck with it.
Don't lose heart ..Fly, he did say he was looking to re enter.I bailed after 8.4 peak @ 7.79 and got back in at 6.45,I have a different take on future trading , AN has run on momentum . I think PBY has another dollar or two barring any adverse market problems.PBY overshot to the downside last year...they may overshoot on upside. Besides there aren't many stocks going up like PBY,There bound to be some day traders piling in, today's volume was encouraging.
This is a qute from TSC. I could not have said it better.....DaninFW
"We've upgraded Pep Boys from sell to hold. Strengths include the company's solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins"
They had to buy $17 million to get a $6.2 million bond repurchase profit. To get a $6.2 million profit this quarter with price now 80%+ the average repurchase I estimate would be at 83% average they would have to repurchase almost $37 million in bonds at $830 a bond to get the same gain. The "poor debt management" reflects the lost opportunity when they cold have retired millions as I suggested at 35-45% on the dollar. They had the liquidity then. They didn't do it if the truth was known because it would have made last quarter better and they sandbagged with the intent to destroy last quarter and prop this one up. If they had not bought back bonds and just reported a 9 cent proit this stock would never have broken $9 IMVHO. The conference call was a joke. Same phrases and statements made as last 2 quarters. The kicker for me was when O'Dell said they had ten times more retail customers than service customers.....and what are they doing? They are focusing on service not the part with 90% of their customers. These guys are rocket scientists. The other thing was this quarter they are up 1%+ in customer count in service and another 2% in ticket average. This really nailed me. I would have been fired if I didn't improve ticket average in my district/region at least 5% a year with 8-10% the expect. O'Dell even commented that maintenance and repair was up and tires down. He should have built on that comment as that is what they should have taken credit for but it appears IMVHO that if tire sales are down then their advertising message is losing steam and getting old. I don't tink these guys can come up with another good idea. That would be asking too much.....DaninFW