ASO
I brought ASO back on friday at $49.49 after selling in the 56's a couple of weeks back. here is what I like.
1) ASO has guided for $6.05-7.05. I happen to believe it will be around $7, with the possibility of next year being around $8. DKS trades at about 15x this years earnings, now I don't think ASO will get that multiple but can't see why it can't get a 10-12 pe going foward. Hence I feel it is too cheap too it's peers. Which would put FV at conservatively about $75-80 over the next 6-12 months.
2) ASO is a going from a regional player to a national player in the space. They plan to open 160-180 stores over the next 5 years. Which should significantly add hopefuly to the top and bottom ine going foward.
3) ASO is a serial buybacker of their stock, so over the long-term I fully expect them to significantly reduce the share count, which will be very accretive to earnings going foward.
4) ASO has a longer-term goal of 10 Billion in sales at 10% Net Income Margins. Granted this is several years away, but if they execute this plan, the point is there should be a significant upward trajectory to earnings over the coming years, and with there aggressive buyback, should even increase the speed of earnings growth over the coming years.
Conclusion: I happen to like the space ASO serves, I feel they are a growing story, they actually are very committed to reducing the share count and trade at a significant discount to it's competitor, which I feel the gap should be closed. Should continue to grow the store count as remember there is like 30+ states that have yet to see an ASO store as this regional brand grows through going national, and the stock trades at about 7 times this years earnings which I feel is too cheap. All is just my opinion, and I could always be wrong though.
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