Very good sales news for Skechers

Thriving times for athletic footwear
Dec 19 2015, 10:41 ET | By: Clark Schultz, SA News Editor

Total U.S. athletic footwear point-of-sales rose 10.7% Y/Y for the week ending December 12, according to data from Sportscan. Unit sales were up 5.7%, while the average selling price increased 4.7% during the week. Both marks easily top growth rates across broad retail. Sales in the basketball category were up 20% from the corresponding week a year ago…

The casual athletic footwear category was up even hotter than basketball with a 32% pop. Wolverine Worldwide and Skechers are likely to have scored a lot of that action.

http://seekingalpha.com/news/2996036-thriving-times-for-athl…

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Honestly Saul - thinking about this, of all the stocks you and we are in; whilst there is debatable risk in just about all of them to greater or lesser extent - some still a matter of concern and debate for the board (e.g. SWKS, AMBA and ahem BOFI), Skechers I feel has got to be the least risk stock of the lot.

The business model is simple to understand, the trend unmistakable and unlikely to shift sharply, the track record there and the future growth foundations in place.

To me this is the best risk/return choice of everything discussed on this board. (Casey maybe the second in terms of risk but lower on growth return potential).

This has to be worth an outsized position and premium target.

Ant

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Ant, on SKX, and risk, for what it is worth my valuation notes read: current growth much better than longer 25% entered. P/FCF high so some ratios fail on that but not PE. FCFM below usual requirement. Fell on analyst revenue miss, general retail sentiment. Inventory growth exceeds revenue: red flag? Co. says only a matter of timing but Mandy Rice-Davis? Watch RS.

I agree it’s an attractive prospect. (No holding at the moment.)

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Ant, there is still a question of timing. If one bought a couple of years ago and so still has a lot of gain after the recent drop, then, yeah, the future looks pretty bright. But, if one bought at the peak thinking that up was the only direction, then the future may not be quite as rosy.

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Tamhas,
One thing this board has helped me understand is that any particular day’s price has little to do with the current business strength. It is a measurement of sentiment of the market more than the reality of the business performance.
I bought in many of the stocks in July and August and have been one of the ones that has seen mostly only the recent declines so I understand your perspective, but I disagree with your statement that the business future somehow looks worse because the stock has declined from our entry point. Whether the stock has gone up or down in the past makes no change at all on how the business will perform for the future quarters. It is definitely easier to drop from a 200% gain down to 50% gain and maintain a positive view, than in the same period to have only a 50% loss.
However, my understanding of this board’s method is that your view of the stock’s future should be based on the company’s 10-Q reports and not the price.
Happy Investing!

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I wasn’t saying that the business future was any different, but that the investment prospects looked different. If one is up 3X from acquisition, one is up 3X, even if a recent fall took it down from a peak of 6X. From there, the likelihood of fresh growth of another 2X looks great. But, if one bought at the peak and one is now down 50%, then 2X merely gets one back to even.

I say this as someone who holds several stocks where I believe in the company, but the timing of my purchase was such that I am now waiting to get back to even before I can see gains.

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Skechers I feel has got to be the least risk stock of the lot. The business model is simple to understand, the trend unmistakable and unlikely to shift sharply, the track record there and the future growth foundations in place. To me this is the best risk/return choice of everything discussed on this board. (Casey maybe the second in terms of risk but lower on growth return potential). This has to be worth an outsized position and premium target.

Ant, I agree entirely, which is why it’s an outsize position for me and high conviction.

Saul

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r what it is worth my valuation notes read: current growth much better than longer 25% entered. P/FCF high so some ratios fail on that but not PE. FCFM below usual requirement. Fell on analyst revenue miss, general retail sentiment. Inventory growth exceeds revenue: red flag? Co. says only a matter of timing but Mandy Rice-Davis? Watch RS.

Strelna, I am intrigued by the other “screening” methods you use, can you tell us the top three prospects you find by those, they might be nice candidates for investigation.

Thanks!

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I currently have no top three prospects; price is eliminating nearly everything. But in the last month I have been intrigued enough by risky NLS, THRM, IPGP and SAVE to have made or added to relatively small positions.

(Note that as these may not have the growth to qualify for interest here, I am risking breaking self-imposed ‘rules of the house’ and reply is by way of quick courtesy, not for extension.)

intrigued enough by risky NLS, THRM, IPGP and SAVE to have made or added to relatively small positions.

I have always liked IPGP but sold it to raise cash for real estate. Sort of wish I bought something else. Their fiber lasers are best in class and stop the old carbon laser.

From Kevin’s spreadsheet, here are the as 8 Q of earnings. Steady, but less that fast increase in earnings. Nevertheless the 1YEPG is 0.65
$0.74 $0.83 $0.97 $1.10 $1.13 $1.13 $1.21 $1.24
IBD ratings are good, composite is a little low…
Composite Rating 92 Neutral
EPS Rating 91 Pass
RS Rating 81 Pass
Group RS Rating B Pass
SMR Rating A Pass
Acc/Dis Rating B- Pass

Spirit (SAVE) is a little week…
Composite Rating 70 Fail
EPS Rating 95 Pass
RS Rating 13 Fail
Group RS Rating A Pass
SMR Rating A Pass
Acc/Dis Rating B- Pass

THRM and NLS are a bit week.

This board could certainly be interested in IPGP and they economically sensitive so could see some acceleration if the economy is truly starting to grow.

Saul just pulled some numbers on CBM, which I obviously like. IBD rates them highly…
Composite Rating 95 Pass
EPS Rating 98 Pass
RS Rating 98 Pass
Group RS Rating A- Pass
SMR Rating A Pass
Acc/Dis Rating D- Fail
*except for accumulation/distribution.
You like a strong RS and they are strong than 98% of other stocks, which is a nice kicker on top of their EPS and SMR rating. Check out the new Cambrex thread and see what you think.

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