Valuations do count Price to sales GNRC 2.02 and RAD .09 Turn around story RAD $ 2.45 after 5 yrs of not making money and the stock price being crushed to $ .93 in Dec 2012 But now profitable Back up with 2 quarters of profits and guiding higher. Most professional money managers Predict RAD $ 2.45 to triple in 2013 with a price target of 2013 Dec $ 3.20 and 2014 Dec $ 7.40 and 2015 Dec $11. This can all be confirmed with Point and figure Chart price target. Plus institutional money flow. In addition many upgrades and increased analyst coverage. once RAD passes $ 5 margin requirements open up and off to Fair value. Currently RAD sits 1/10 fair value to peers. WAG CVS dltr fdo five all north of $40 per share. Point and Figure chart confirms
Price target $ 5.75. RAD daily volume normally in the top 20 leaders
For the last four years RAD's revenue has been a random number between $6.1 and $7.2B. I wouldn't call the comeback just yet. If they can keep revenue in that same random number range, and improve net margins to something like DLTR (7%), CVS, FDO, DG, WAG (all less than about 6%), then they'll have something to brag about. They'll also be making nearly $2 per share 12 months from now. But that would mean increasing NPM from the TTM of 0.4% by more than an order of magnitude.
My seasonal forecast for RAD suggests a fair price of $3.15, a predicted return of less than 1%. However, revenues remain unstable, I wouldn't stand behind that one. The R^2 on the best of six regressions is 0.013 (98.7% of scatter is unaccounted for)
You mentioned Dollar Tree, which fits a seasonally adjusted regression model with R^2 = 0.987 (1.3% of the scatter is unaccounted for.) That means I can predict next quarter's revenue to within a few percent. In the last three years, my largest error was 6%, and they beat my estimate.
Now on to Generac - Revenue growing, fairly predictably, at 30% over the last four years. Net Margins in the 8-12% range over the last four quarters. Current fair price estimate is $115, a predicted return of more than 100%.
I only actually buy stocks with revenues that fit my regression with an R^2 of more than 90%, and then only when they're selling for less than 50% of what the forecast estimates they are worth. So I don't actually have any GNRC, though I'm watching closely.
My current buy list includes:
AAPL, CSCO, DDD, EZPW, SAVE
BIDU, DLTR, JAZZ, MDCO
All I can say about RAD is I've had my core holding since 2009, and my cost is .37, so I am a happy camper. Hoping for 5.00 - 7.00 over next 2 years. Management change last year has driven return to profitability. I like your approach of finding underpriced growth stories.
photocat, charts are fiction? only if you don't understand them. they are based on quantified data and are a great tool. that is why they are so prevalent. your comment is moronic. i think i know who you are. you have changed your identity but not your style. sad.