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Pacific Sunwear of California Inc. Message Board

  • rbachmann2000 rbachmann2000 Jun 14, 2006 2:18 PM Flag

    Underpriced

    This stock is undervalued. Right now the store base is ~800 PSUN stores, 200 DEMO stores. When I called the VP of investor relations, we told me they are looking for 200 more PSUN stores, 200 more DEMO stores before saturation. So basically, PSUN can grow 40% in sales roughly, before it's saturated.

    Even putting in 8% EPS growth for the next five years, I still get a share value of $22 in my model, which is pretty detailed.

    And remember, this doesn't include any of the possible growth from Thousands Steps (which the VP told me could grow to 600 stores before saturation).

    Any I missing anything? I know the price is my model is sensitive to inputs, etc. but this stock still seems way cheap.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • And the cheap continue to get cheaper. It hasn't been this price since August 2004.

    • EBITDA 20% of market cap, market cap less than annual sales, no debt, lots of cash. It's a no-brainer.

    • SSS are very important, but you also have to factor in guidance. PSUN could post horrific SSS, which they probably will, and turn around and give upbeat guidance and send the stock higher. Seasonality always plays a big part in retail investing. Now is the time to pick up your picks, when everything is at their lowest points, business and stock prices.

      On another note, I'm hearing nothing but rave reviews about 1000 Steps.

    • PSUN is forming a classic sharp bowl formation for trend reversal. The classic example of this was first observed by American Safety Razor in 1932 and many others since then. (Edwards and Magee - Technical Analysis of Stock Trends 7th Edition).

      This reversal characterised by a sharp break in the opposite direction (up for PSUN) then a period of consolidation, followed by another leg up.

      My interest is in the inital sharp break upwards as it is easy money and fast too.

      For you longs, PSUN is technically forming a bottom, but not one that will languish at the bottom. This means checkbook time for me. All aboard....I will just get off at the first station. If you doubt the bottom, merely take a look at the Parabolic SAR for this stock. It could be showing a bottom already.

      Exact bottom? With todays stats included, we could be there now or in the next day or two.
      I just did some changes after looking at the new charts and my buying program kicks in tomorrow morning. A little tomorrow, more the day after, tweaking as the stats change.

      This is my plan so far. If the stats change significantly, I could hold a little longer than expected. I never argue with the trendlines though...they always win.

      I am using PSUN to make some fast money to add more shares for a Longterm investment elsewhere (SMSI for the curious) that could give me sufficient profits to "walk-away forever".

      Good luck to all.

    • mr_kitrino_podilato_karamolengos mr_kitrino_podilato_karamolengos Jun 26, 2006 7:36 PM Flag

      What's gonna on wit 'his company? It just keep on goinni down.....true its pe is low...yet it can go lower.....

      maybe the management should give us dividend & more stock buybacks to boost confident......

    • I like Phil Fisher as well.
      I adhere to his conctrated portfolio theory.
      Keep a close eye on your eggs, but do not have to many eggs because you cannot focus enough attention (know the businesss) if you have too many eggs. He also recommends Sales growth as the key factor and low P/Sales ratio. This is good in a commodity type of industry, but does not work in retail because some companies have intrinsically higher margins (TRLG 50% +) while others have narrow margins (Walmart). Both companies are sucessful from a sales growth perspective, but using the Fisher method, you would not buy high sales margin companies, unless:

      You looked at historical price to sales ratios. I.e. Margins are constant, but the dip in price results in a declince in P/Sale ratio: thus, this company would be a buy.

    • " I am predicting a 18-22 price run over about 45 days....or a lot less!!! 22 percent and change in 30-45 days. "



      It all depends on June's SSS numbers.

      These are unpredicable and this is where you make the money. Look at great companies. In retail you get SSS monthly, restuarants quarterly, so retail is better because you do not have to wait as long for results. At any rate, great companies will have a disappointing month. So wait for a disappointment (stock price goes down) and then wait for its normality (i.e. 5 year record of EPS, sales, SSS, BV growth).

      Another point about retail is its fluidity. Lets say that a retailer had a fashion miss on denium or a shirt. First, a retailer usually carries HUNDREDS of items. Secondly, it does not take long (a quarter or less) to remedy the fashion miss. And from then on, they are back on track. As long as you have a quality management team who goal is to increase shareholder value, and has done this impressively for the past 5 years, you are almost always good.

      All retailer (businesses) have problems.
      As JD Rockefeller said:
      "All of my life is about overcoming problems".
      In essence, sucessful people/businesses, overcome problems. The higher percentage of sucesss, whether in making it so that you do not have them (the goal) or in overcoming all of your problems, the richer that company/person is going to be.

    • Consumers always have to buy clothes. Now, they may not go out to eat as much and eat at home, or go golfing, et al... as much, but clothing is relatively imperious to external factors as an industry.

    • I try to buy stocks that I can hold at least two years or more. I don't bother with technicals. I think PSUN still has potential to make me money longer term. The price here reflects the markets over concern with future consumer spending in general.

      In an article that I read some time back, Phillip Fisher compared the results of trading one stock and holding another. The results showed him that the buy and hold method worked better. Hope that you have better luck than he did.

      As for shorting stock, good luck on that one. It's too hard for me to predict the short term direction of any stock. It's easier for me to see extra value in a company that the price does not reflect. I don't think that PSUN will go to $17.63, but then again I didn't think that it would go to this level either.

    • NEWBIE here......

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PSUN
1.92-0.09(-4.48%)Jul 30 4:00 PMEDT

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