Thursday, 6 December 2007

Buying Heely's - P/E just too low

One thing I want to get going with this blog is an active single-name equity portfolio. Whilst macro trades make good discussion points, trading will be limited as most of my views are more medium-term. So equities will allow more frequent positioning.

First up is a stock I've watched for a while, Heely's. It IPO'd about a year ago somewhere in the 30's, and is currently trading a little over $6. Yes $6. The P/E is a lowly 4.3, with a forward P/E of 6.8. Market cap is $166m.

1y Chart of Heely's Stock Price

The stock got crushed back in August when the company said inventory levels at retailers were quite high, but it always seemed overdone to me. Yes, it's a bit of a one-trick pony when it comes to this company, but even so, I still see kids all over the place wearing these things. And I'm guessing a fair few have got them on their Xmas shopping lists...

Also I have seen these throughout Europe also, so whilst I'm not sure what proportion of their sales are from overseas, every little helps with the weak dollar. With sales of $245m on a market cap of $166m, and other attractive metrics including healthy margins, this one looks like it is just trading at the wrong price. We'll see. Putting in $10k at $6.15 a share.

What say you?


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