ANF: Abercrombie & Fitch

Date: 10 March 2009
Price: $18.74
P/E: 3.7
FP/E: 8.1
P/B: 0.8
Yield: 4.2%
Debt/Eq: 0

Company Description
Trendy, expensive clothing retailer.

Past 10 years
Actually looks pretty good. Sales and earnings have consistently grown. Free cash flow has been forthcoming, and book value has increased. They've never had any debt.

Pros
It's all about the history. This company has been very successful over the past 10 years - typically trading between 12 and 22 times earnings. So it's very cheap right now on any measure.

Cons
The downside is that the next couple of years are expected to be pretty grim. The mean earnings forecast for 2009 is 3.29 (giving P/E of around 5.9) and for 2010 it's 1.78 giving a P/E of 10.x. The company itself described Q42008 as a disaster for retailers (sales were generally down around 25% on last year), and gave the following comments on the upcoming year:
"The Company anticipates a difficult selling environment to persist throughout 2009 and believes there may be significant volatility in sales levels."

Of course this is all market worry rather than company specific concerns - and there doesn't seem to be much doubt that Abercrombie would remain profitable, just at a reduced level.

Conclusion
Yes - moderate buy.

7 March 2009, Dow 6627, FTSE 3530 - screening

As I start looking to invest again, I'm a little overwhelmed by the number of really cheap stocks available at this time - but also excited.

In this post I'm going to jot down a few notes on the stocks I've found - simply as a to-do list of stocks to investigate. This is based on a list I got from the MSN Deluxe stock screener (see previous post).

Screen
Roughly: FP/E < 10, Yld > 4%, Debt/Equity < 20%, P/B < 1.
I'm ignoring financial stocks for now, as these are something of a special case.

Stocks

SAY - Satyam Computer Services - Indian based consultancy.
FPE = 1, P/B = 0.28
Price has crashed in the last couple of months. A brief skim of the news suggests they're raising more money, and that there's some sort of fraud/legal investigation ongoing. May still be a bargain, but clearly there are reasons for the ridiculous price.

PDS - Precision Drilling Trust - Oil and Gas equipment
FPE = 2.3, Yield > 17%
Latest news suggests that my debt stats are incorrect, as they're trying and failing to issue debt to raise more money - perhaps to finance a recent acquisition. Again - doesn't look like a conservative pick.

ERF - Enerplus Resources - another oil and gas exploration
FPE = 3.5 (per MSN - more like 8 in reality), yield 12%
Nothing untoward here, other than typical economic woes due to falling oil and gas prices. Worth further investigation.

PAC - Pacific Airport ADR - own airports and other properties in Mexico
FPE = 6.9, P/B = 0.49. No debt.
No disasters here. Worth further investigation.

ELY - Callaway Golf Co - Makes and sells golf clubs and other accessories
FPE = 8.6. Generally cheap, but nothing spectacular.
Worth further investigation - simple business.

WES - Western Gas Partners - gas pipelines, processes and transports gas in USA.
FPE = 9. P/B = 0.5 Yield = 9.3%
Worth further investigation - has long term contracts, so may not be hit by falling gas prices particularly.

ANF - Abercrombie and Fitch - clothing retailer
Just qualified under my filter. Not particularly cheap. I don't like them because they're trendy and I'm not! :-) Maybe investigate.

RDS.A - Royal Dutch & Shell: A shares - gas again
Huge company, that I've owned (profitably) before (which is irrelevant). P/B is slightly over 1, but P/E is 6, and yield is 7.5%. Worth looking at - obviously need to figure out what the A shares are.

SNY - French pharmaceutical company
Generally cheap - FP/E of 7.
No crisis. Worth investigating.

EBF - Ennis, Inc - sells business forms, and T-shirts... ?!
Smaller than other companies. FP/E 5.4, Yield 8.3%.
Worth investigating.

For further investigation:
ERF, PAC, ELY, WES, RDS.A, EBF, SNY, ANF