| Stock (Symbol) | Stock Price | |
Conns (CONN) |
$46 |
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| Data is as of | Expected to Report | Sector |
June 9, 2014 |
Sept 1 – Sept 5 |
Retail & Travel |
| Sharek’s Take | ||
| Conn’s (CONN) is on the upswing because the retailer and credit provider had an improvement in its delinquent accounts. Accounts late more than 60 days dropped from 8.8% in January to 7.8% in May, and this is at least partially due to better weather following those bad winter storms that kept shoppers indoors. CONN is jumping back-and-forth with its delinquencies, which were bad 2 qtrs & 4 qtrs ago, but good last qtr and 3 qtrs ago. Conn’s is morphing itself from an electronics store into a furniture/electronics store and this will produce higher profit margins. Furniture & mattresses now account for 32% of sales, up from 26% a year ago, pushing profits margins up 1%. Also, same store sales jumped 16% last qtr. Conn’s had around 74 locations at the end of 2013 and will add 15-20 new stores this year, with potential for 300 across the U.S and the company has a new store model where $1 million investments into store bring in pre-tax profit of $3.4 million in the first year. CONN has huge upside here as my 2015 Fair Value is $89. Investors need to get past the bad credit bad news and focus on the good. |
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| One-Year Chart | ||
 What did I buy this at? $75 last December. I should have doubled-up when the stock was in the low-$30s. I should double-up now. P/E of only 13 compared to the Est. LTG of 23%? The stock should be double what it is. Note at the bottom profit growth has been great. |
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| Earnings Table | ||
 Profits increased 36% last quarter as sales surged 34%. Conn’s beat the street this time, by 7 cents, and you can see the history of beating and missing that’s been jerking the stock around. Annual Profit Estimates increased but just by a little bit, not as much as they dropped by 2QtrsAgo. Quarterly estimates look fantastic. Now if the credit can just hold up. |
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| Fair Value | ||
 The recession of 2008-2009 and then people switching to buying electronics online were double-whammys for many electronic stores, including J&R. Not only did Conn’s survive, it thrived, posting record profits of $2.57 last year. Profits are also set to climb 40% this year. All I’m asking for here is 20x earnings, which puts 2015’s Fair Value at $89. |
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| Ten-Year Chart | ||
 This stock was on a nice roll higher until the credit problems popped up. I really think we should be buying more of this stock. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
12 of 25 |
Conn’s has grown profits faster than 35% in each of the last four quarters yet the stock sits at only 13 times earnings due to the bad credit/good credit fluctuations. I think investors should double their positions while they can. CONN ranks 12th of 25 stocks in the Growth Portfolio Power Rankings. It’s 8th of 12 stocks in the Aggressive Growth Portfolio Power Rankings because aggressive investors could have big gains if CONN gets to where it should be. |
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Aggressive Growth Portfolio
8 of 12 |
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