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Posted On: 05/05/2017 2:07:56 PM
Post# of 2218
$SPWH The Best Cheap Stocks to Buy for $10 or Less: Sportsman’s Warehouse (SPWH)
Stock Price: ~$4.15
There aren’t many retailers out there worth considering, but Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is one of them.
SPWH has been hit by concerns about weakness in its hunting and shooting assortment. Weakness in firearms similarly has brought down stocks of manufacturers like Vista Outdoor Inc (NYSE:VSTO), American Outdoor Brands Corp (NASDAQ:AOBC) and Sturm Ruger & Company (NYSE:RGR).
In the case of Sportsman’s Warehouse, the decline has been too severe. SPWH trades at just 7 times the midpoint of FY17 EPS guidance — a multiple given to a declining business. Yet the company’s adjusted EBITDA increased by double digits in FY16, and a guided (modest) decline in EPS this year is coming from what should be somewhat temporary weakness in hunting.
Even a more modest 10x multiple gets SPWH above $6, or more than 30% upside — even if FY17 guidance comes in toward the lower end of the range.
While investors have wisely sold a number of retail stocks, SPWH is in the cheap stocks doghouse for no good reason whatsoever.
Stock Price: ~$4.15
There aren’t many retailers out there worth considering, but Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is one of them.
SPWH has been hit by concerns about weakness in its hunting and shooting assortment. Weakness in firearms similarly has brought down stocks of manufacturers like Vista Outdoor Inc (NYSE:VSTO), American Outdoor Brands Corp (NASDAQ:AOBC) and Sturm Ruger & Company (NYSE:RGR).
In the case of Sportsman’s Warehouse, the decline has been too severe. SPWH trades at just 7 times the midpoint of FY17 EPS guidance — a multiple given to a declining business. Yet the company’s adjusted EBITDA increased by double digits in FY16, and a guided (modest) decline in EPS this year is coming from what should be somewhat temporary weakness in hunting.
Even a more modest 10x multiple gets SPWH above $6, or more than 30% upside — even if FY17 guidance comes in toward the lower end of the range.
While investors have wisely sold a number of retail stocks, SPWH is in the cheap stocks doghouse for no good reason whatsoever.
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