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Quiksilver Inc. Message Board

  • greenzorrow greenzorrow Dec 13, 2010 11:04 PM Flag

    Genius analysis by greenzorrow, takeover likely, imo

    Recall my brilliant analysis in March 2010, that I reprint below after this message. Since then, the stock rose nicely with good profits, as the economy rebounded and ZQK has better refinanced. In this popcorn market, brand image companies with decent earnings are all trending much higher or are even at new highs. Where else can one get a niche brand to spruce up at a discount? Deep pockets should be able to finish the refinancing and get the brand better positioned.

    I am buying over 5 for arbitrage profit potential as I expect a deal from sharp investors to get generate even more profits north of $7. Somnabulist thinkers will miss a nice gain, but then again, they dont surf and play...just sleep at beaches.

    Enjoy my excellent analysis and hope you ride the wave with even more profits. Again, make sure you are diversified in your portfolio with a position of no more than 5%.

    Buy or Die!

    March 2010 Analysis...

    The recent earnings release indicates that ZQK can be taken over at $5.00, IMO, and at $3.11 closing price this would give investors a gain of 60%. Assume a takeover at 5, then multiply that price by 130 million shares, which = 650 million; plus 860 of debt assumptions; and, thus a takeover price of 1.5 billion. With options and investment fees, say $1.7 billion. The buyer would be able to renegotiate the interest rates as it would be a better credit, and the buyer could float some equity. For example, hypothetically, if NIKE were to be the buyer it's 34 billion market cap would make ZQK a snack.

    Now what does the buyer get? A great brand image whose EBITDA is on the upswing and is derived globally. Looking at the past few years and excluding the ski imbroglio we can assume a normalized EBITDA of 225 million. That is a 13% return before possible synergies. Getting this brand name cheap at this time, may not be possible once the consumer markets rebound, IMO, especially as the price points of ZQK's merchandise makes the New Normal its better customer.

    I would buy here but have no more than 3% of one's portfolio in ZQK to diversify the risk. One also assumes one has fixed income, commodities, gold, and cash to diversify the equity portfolio.

    In my opinion, at 3.11 BUY OR DIE!!!!!

    Sentiment : Strong Buy

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    • do you think billabong's weak sales forecast will put a damper on our rally?

      • 1 Reply to stb844
      • NO, as this negative is the positive that should lead to a takeover. First, this is the cold weather outlook and not the Spring 2011 warm weather outlook. Then realize that it also reflects the weakness of management to exploit its brand. Zumiez, Nike and others have good stock movement because even in this economy they have brand awareness and good sales. ZQK needs to get fresh air into its product line and these deep pocketed suitors may provide that skill. This is the time to strike while the stock is still affordable. I am buying over 5.

        So, no. It is an ironic positive.