While maybe not as exciting as some had hoped, the upside is still significantly greater than the downside risk and we stay in the bull camp,
Retailers are getting smarter in the way they do business. They are reducing their inventories and keeping prices steady. Consumers are beginning to realize that they can't just wait for the sales like they used to.
Given the plethora of new and improved products that we should see this Christmas ... if there was a year to have a delay, this is it.
Kmart is generating well over $500 million a year in cash flow. They have over $2 billion in cash. That, combined with their real estate value, should provide higher support for the stock.
With the stock trading at these attractive levels, we would have liked to see more significant repurchases.
Their lack of investments in systems, continued new store growth by Wal-Mart and higher prices point to short-term cash maximization, not long-term growth,
That comment should calm concerns that the first quarter could be down, and positions Best Buy for solid earnings per share improvements against the second and third quarters.
The stock trades above a level that we would view as appropriate for the current earnings that, absent signals of improvement or takeover, would imply downside.
Michaels announced management changes that we believe will be a plus to the story at this time.
We believe that the turnaround story is very much on track and we view AutoZone as an interesting story for 2006.
