Wednesday, August 6, 2008

Enterprise value

This morning, I put out an innocous looking post on Whole Foods:

WFMI (18.33) missed numbers, and analysts downgraded the stock, and it's down 4 1/2 bucks. Yesterday they gave FCX away. Three days ago, the market gave MNST away. Now they are giving WFMI away.

Buy it for the enterprise value!

WFMI closed at $20.04 on 26 million shares. It was a nice buy.

It was the same last week with Monster. Downgraded Friday, by four analysts. But the stock was available at 16.26 for all you wanted at the opening. It hit 19 today. You had the story when it happened....

and before it happened...

The same with FCX yesterday.

It's enterprise value. No one cares, and Wall Street is so myopic because no one seems to do their homework, so the sheep sell.

Today Whole Foods cut the dividend, cut the store openings, and cut discretionary capital expenditures. They made .24 cents versus the .31 the street estimated. Here's the transcript. You can read it here.

But Wall Street didn't tell you about the land they acquired in the Carolina's for growing organic ginger, nor did Whole Foods. Unless you are a property sleuth, you won't be able to find it. But without it, they missed by a couple cents, not .07.

Does that make a difference?

To me it does.

And if you picked up the stock when I advertised it, you got it .07 cents off the bottom, which is the figure that Wall Street said they missed their earning by!

So that's my two cents take on Whole foods.

But enterprise value? Look at tech. When oil goes down, tech stocks go up. That's the current play on the street, whether you like it or not. And oil's going lower.

So two tech stocks with decidedly higher enterprise values than their current stock price, with decidedly negative Wall Street analysts, with huge short positions, and with charts and stock action that indicate a bottom has been put in are SanDisk (SNDK 15.24) and Garmin (GRMN 37.83).

They are worth a look.

And unlike Oz, when you peel behind the curtain, they look better than they appear!

Especially if you like to sleuth!

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