Seeking Alpha: Euronet Still Looking To Transfer Growth Into Shareholder Value

Around six months ago, I tagged Euronet Worldwide (EEFT) with the "interesting company, not so interesting stock" label and I can't say that I feel like I've missed much. The shares are up about 5% since then, trailing the S&P 500 and really only performing well after a money transfer business agreement with Wal-Mart (WMT). I'm more favorably inclined toward Euronet at this point, though, as I like the Wal-Mart agreement and the HiFX acquisition and the shares appear priced to offer a decent return.

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Euronet Still Looking To Transfer Growth Into Shareholder Value

Seeking Alpha: Ingles Markets An Okay Supermarket, Sweetened With Real Estate

On the whole, food retailing is not a particularly attractive business in developed markets like the U.S.. Same-store sales growth is typically lackluster, competition is fierce, and margins are thin. New concepts can certainly distinguish themselves, but it is all in all a tough business in which to earn strong returns on capital.

Ingles Markets (IMKTA) is not exactly a tremendous exception. While the company's sales per square foot and margins hold up pretty well relative to the likes Harris Teeter, they definite lag those of Kroger (KR) (which now owns Harris Teeter) or Safeway (SWY), same-store sales growth has been sluggish, and the company's free cash flow generation is not all that impressive. Add in the value of the company's real estate, though, and the picture brightens. The shares currently trade above my "base case" value estimate, but there is upside if commercial real estate prices improve further and/or another supermarket chain looks at Ingles as an incremental growth opportunity.

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Ingles Markets An Okay Supermarket, Sweetened With Real Estate

Investopedia: The Fresh Market Can't Put Margin Worries To Bed

As I wrote a quarter ago, The Fresh Market (NYSE:TFM) is a highly-valued growth stock in the food retail space, and one where the company is starting to see some real pushback from the market as to the company's margin structure and competitiveness. I didn't expect all of the concerns to get resolved in one quarter, but the company's willingness to increase promotions and accelerate store builds seems to be exactly what the Street does not want to hear right now. As I suspect there's a good chance of these shares getting even cheaper, investors may want to keep on eye on this name as a growth stock increasingly trading at a reasonable valuation.

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Investopedia: Canadian Dilution And Sluggish U.S. Shopping Bring Target A Little Wide Of The Mark

When Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and Costco (Nasdaq:COST) all see relatively uninspiring same-store sales growth trends, I think it's safe to say the U.S. retail market is not in the best of health. Although Target continues to take steps that should improve the company's long-term competitiveness and growth profile, Wall Street is generally very much focused on the now and underperformance creates some challenges for the shares.

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Investopedia: Consumer Spending Looking Bleaker For Wal-Mart

It seems like hopes for a strong back-to-school season (not to mention a more general spending recovery overall) are fading away for Wal-Mart (NYSE: WMT). Weak consumer spending may not be a huge surprise this quarter, but I found it interesting that the company also lost some operating leverage. In any case, while Wal-Mart really isn't the sort of stock to buy or sell on the basis of one quarter, but I find the valuation and potential here to be pretty underwhelming on the whole.

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Seeking Alpha: CRE Playing The Long Game In China, And Looks Significantly Undervalued

Investors know all too well how challenging it can be to generate long-term gains from Chinese equities. Leaving aside those companies that play fast and loose with accounting or pin their hopes on favored relationships with government officials, there are the rapidly-changing economic trends that may make long-term forecasting even more challenging.

All of that said, I think investors should give serious consideration to China Resources Enterprise (CRHKY.PK). While CRE carries the black mark against it of being a state-owned enterprise, the company has emerged as a leading retailer and brewer in this fast-growing economy, and is looking to invest more in its food processing and beverage businesses.

What's more, the company plays the long game - using JVs and foregoing quick near-term profits to build a larger, more profitable business down the road. All told, I believe a case can be made that CRE shares should appreciate 40% to 50% over the next 12 to 18 months as China recovers and investors return to names leveraged to Chinese consumer spending.

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CRE Playing The Long Game In China, And Looks Significantly Undervalued

Investopedia: Will Less Scarcity Value Harm Whole Foods?

Whole Foods (NYSE:WFM) is still most commonly identified as the supermarket for organic, natural, and healthier foods. While plenty of shoppers know about chains like Sprout's (NYSE:SFM), Natural Grocers (Nasdaq:NGVC), and The Fresh Market (NYSE:TFM), just about everybody has been to a Whole Foods once. With more organic/healthy food options in the stock market, not to mention a significant expansion at conventional retailers like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), just how special is Whole Foods anymore? While the numbers continue to support the notion that Whole Foods is an uncommonly well-run retailer with considerable growth potential, it's increasingly challenging to justify the price on the shares.

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Investopedia: The Fresh Market Facing Its First Real Challenge

Every company has growing pains, and what separates the long-term winners from the flash-in-the-pans is how management responds to those challenges. The Fresh Market (NYSE:TFM) continues to post very strong returns on capital and has a sound business plan that looks to exploit more affluent shoppers' desire for high-quality produce that they cannot find in conventional supermarkets. For now, though, the company's comps growth appears to have stalled and a renewed emphasis on produce from major competitors threatens the company's value proposition to the customer.

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Investopedia: After A Big Rally, It's Up To Renew Blue For Best Buy

It wasn't so long again when the buy/avoid decision on Best Buy (NYSE:BBY) came down to the relatively simple discussion of whether you thought the company would be able to stabilize and continue on (with zero growth) or perpetually decline. With the shares up almost 50% from last year and 100% from the late December 2012 lows, now the question has shifted to how much growth the company's restructuring efforts will produce.

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Investopedia: Wal-Mart Uses Rigorous Cost Control To Offset Weaker Sales

It's no secret that a meaningful percentage of the country's retail business goes on under the roof of Wal-Mart's (NYSE:WMT) stores. To that end, when consumers are feeling pressure (particularly those on the less affluent side of the ledger) it shows up in Wal-Mart's numbers. This gigantic retailer didn't have a bad fiscal first quarter, and it sounds like the fiscal year ahead should get better, but once again Wal-Mart is having to turn to operating synergies to wring out some growth. This stock's status as a proxy for the U.S. retailing sector makes talk of value somewhat moot, but these shares don't look notably cheap on a long-term basis.

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Investopedia: Bull Vs. Bear - A Deal For The Fiscal Cliff Won't Be Finalized Before The End Of December

Question: Is a deal for the fiscal cliff going to happen?

Bear's Response
When considering the question of the upcoming "fiscal cliff" (the expiration of various tax cuts and the simultaneous automatic cuts across a variety of federal budget items), I'm reminded of a famous quote from Winston Churchill, "Americans can always be counted on to do the right thing ... after they have exhausted all other possibilities." While I do believe Congress will have little choice but to find a compromise that undoes the growth-damaging combination of higher taxes and lower spending, it will not come until 2013.

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Investopedia: A Few Hiccups Aren't Going To Derail Costco

As one of the strongest retailers in the United States (not to mentioned one of the best-liked), Costco (Nasdaq:COST) already has a lot going for it. Not only is Costco already an exceptionally efficient retailer in terms of generating sales per square foot, the company still has ample organic expansion potential in the U.S. and abroad. The down-side to this story is not too surprising - Costco's success and popularity are well-known among investors, and the stock doesn't offer a compelling bargain relative to expected above-average growth rates.

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Investopedia: Bull Vs. Bear - Special Dividends Are A Good Thing

Question: Is early payment of dividends an effective way of avoiding the tax due to the fiscal cliff?

Bull's Response
There's really only one fundamental reason for publicly-traded companies to exist - to pool capital from shareholders, invest it in projects that generate positive net economic returns on that capital and return the capital to shareholders. Whatever legal moves a company can take to maximize the value of the capital they return to shareholders is, on balance, a good thing.

So too with the recent spate of special dividends and accelerate dividend payment schedules in light of the potential tax ramifications of the fiscal cliff.

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Investopedia: If You Can't Beat The Taxman, Outrun Him!

Economic theorists warn that fiddling too much with tax policy provides incentives for market participants to devote time and energy to managing their tax exposure, as opposed to going about the productive work that generates that taxable income. The last few weeks have suggested that those theorists are onto something, as a variety of companies make moves designed to end-run the upcoming changes in tax policies tied to the fiscal cliff.

Many companies, including Costco (Nasdaq:COST), have announced special dividends to be paid ahead of the year-end as a means of transferring more cash to shareholders before taxes on such distributions increase significantly. Now a host of companies are making slightly less dramatic, but still significant, changes to the timing of their dividend payments in order to avoid at least some of the effects of the fiscal cliff.

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Investopedia: Kroger Makes The Best Of Tough Environment

For those who think supermarket operators can't produce worthwhile capital gains, Kroger's (NYSE:KR) roughly 18% move up over the past three months is a good counter-argument. What's more, while food retailing continues to be a tough business, made even more difficult by price competition from entities like Walmart (NYSE:WMT) and dollar stores and economic pressures on shoppers, Kroger continues to execute at a high level. Although this stock still does not look all that cheap on a cash flow basis, investors should never be quick to abandon well-run companies.

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Investopedia: Wal-Mart's "Meh" Quarter Doesn't Excite Investors

This has been a better year for Walmart's (NYSE:WMT) stock than many of its customers, as the stock has more than doubled the return of the S&P 500. While Walmart did have a solid back-to-school season and is as leveraged as anybody to improving consumer conditions (and confidence), the sluggish comp numbers suggest that the company is not completely out of the woods. 

 

Decent, but Not Great, Third Quarter Numbers 

Walmart's earnings always get a lot of attention, given its enormous position within the United States retail sector. To that end, Walmart's numbers may be a good reminder that, while the worst may be over, that's not the same thing as saying that the good times are back.

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Investopedia: Winn-Dixie Needs An Identity

Since emerging from its bankruptcy of 2005, Winn-Dixie (Nasdaq:WINN) has struggled to really work as a stock or as a food retailing concept. Not really a value-focused player like Wal-Mart (NYSE:WMT) or Aldi, nor a top service provider like Publix or Ruddick's (NYSE:RDK) Harris Teeter, Winn-Dixie seems to be foundering a bit as it tries to rebuild its business and its market cap. With fiscal fourth quarter earnings and 2012 guidance in hand, it is hard to see where this stock really fits.

Fourth Quarter Results as Expected  
Given the Winn-Dixie preannounced some of its fourth quarter results a little while ago, there was not a lot of drama in the numbers that the company did report. Reported sales fell almost 4%, while identical-store sales rose more than 3% despite a decline in store traffic.
 
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Investopedia: Helen Of Troy Still Looking Fetching

Every experienced investor has a stock or two that they have followed seemingly forever but have never actually owned. Houseware and personal care product manufacturer Helen Of Troy (Nasdaq:HELE) is one of those for me. Apart from some issues with executive compensation, I have liked this consolidator and low-cost operator and have often seen it as an undervalued and unduly ignored player in a stable market. And yet, I always seem to manage to find some excuse not to own it at any given time. 


Perhaps now is the time. With fiscal first quarter results in hand, it looks as though the company's core businesses are doing fine but that there is still substantial opportunity to improve the cost structure of the newly-acquired Kaz business and find still more consolidation opportunities.

A Mixed Bag in Fiscal Q1
It will be interesting to see how Wall Street chooses to process and interpret Helen of Troy's fiscal first quarter results. On one hand, the top line was quite strong. Revenue grew by almost 70% on a reported basis, with the company's largest segment (Personal Care) growing more than 9%. Housewares revenue grew more than 10%, while the Healthcare/Home unit saw revenue growth of about 7% on a pro forma basis. Working back through the numbers, it would seem as though underlying organic revenue growth was better than 9% this quarter and the company did surpass the high end of analyst expectations. 



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Investopedia: BJ's Goes Bye-Bye

To see the announcement that BJ's Wholesale Club (NYSE:BJ) had agreed to sell itself was only slightly more surprising than Thursday following Wednesday. For starters, this warehouse retailer has been a laggard behind Wal-Mart's (NYSE:WMT) Sam's Club and Costco (Nasdaq:COST) for quite some time and laggards in attractive industries are always appealing takeout candidates. What's more, rumors, speculations, aborted offers and announced intentions have been preparing shareholders for a deal for at least a few years now.

The Deal That BJ's Got
BJ's announced that it will sell itself to private equity parties Leonard Green & Partners and CVC Capital Partners in an all-cash deal worth $2.8 billion. That means $51.25 per share - only about a 7% premium to Tuesday's close, but a 38% premium to the price before LGP took a significant ownership stake and very close to the all-time high for these shares.

Even at this price, though, BJ's is not exactly bowing out with a premium valuation. At only a little more than six times trailing EBITDA, BJ's is going at a valuation close to slow-growing Wal-Mart and Target (NYSE:TGT) and well below rival Costco and a wider universe of value-oriented retailers like Family Dollar (NYSE:FDO) and Dollar General (NYSE:DG). What is interesting, too, is that on a discounted cash flow basis this price does not anticipate much in the way of dramatic improvement - if LGP and CVC can really turn this business around, they will get the vast majority of the benefit.

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Investopedia: ConAgra Still Not Very Appetizing

When it came to light a little while ago that ConAgra (NYSE:CAG) was interested in acquiring Ralcorp (NYSE:RAH) and really focusing on private label food, it made a lot of sense. With another quarter in the books, it is increasingly clear that they may be ConAgra's only real chance of competing - this company just cannot gain much traction in the supermarket and has done little to improve a portfolio of brands that lacks leaders. (For more on supermarket stock, check out Evaluating Grocery Store Stocks.)


A Weak Close to the Fiscal Year
ConAgra's press release boasts of "strong" comparable growth, but I have to wonder what definition of "strong" the company is using. Yes, revenue was up over 5% this quarter and that's not bad for a large food company. What ConAgra management is glossing over, though, is that sales in the year-ago period were down about 5%, so the comp was especially easy. In fact, sales in this quarter were still lower than in 2009, so just exactly how strong does ConAgra think their business is? It is worth noting, though, that this is the first positive comp after four straight negative quarters.

Looking further at the top line, the consumer business saw less than 1% growth as a modest boost from pricing was overwhelmed by a fall in volume. Commercial sales were much stronger, though, and climbed about 14%.


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