When looking for a company to buy, I try to find some of the following characteristics:
So Ruby Tuesday's real estate sets a floor and is a major consideration for speculating on the stock. Sounds similar to the BOBE story. Why is RT under $7.00 and BOBE is $50.00? Is RT way undervalued or is the opposite true of BOBE.
A stock that has fallen out of favor with investors
A stock that has a major catalyst on the horizon
A company that has signaled that they are close to a bottom in their business
A compelling valuation
A stock that is supported by assets that create a "floor" on the stock
It's hard to find all six of these characteristics in one stock, but in Ruby Tuesday (RT) you get all of them. This company, due to years of underperformance, has fallen out of favor with investors. My favorite catalyst, a management change, has recently taken place. The company has significant real estate assets that provide support for the stock, and there has been recent insider buying in the stock. Most importantly, at this valuation, you are basically getting the operations of the business for free! Let's get into more detail on the company…