AlphaMale(Man)

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  • Why We Doubled Our Position in Borders
    It's as ridiculous to claim that this is a $26 stock (at the moment, at least) as it is to say the company is on the bankruptcy. People, how about some moderation in your projections? The company brings in billions in revenue, the folks who are only or mostly going to buy via Internet are already factored in to the brick-and-mortar customer base, and with a little tweaking and a little luck Borders Group can once again reach the mid-teens (to hit the twenties would, I think, require a stronger economy, or at least that the market anticipate a stronger economy). Let's be honest: the stores are not worth $4 million each, but in Beantown (Boston), for example, the downtown Borders is thriving and the Barnes & Noble vacated its prime location years ago. Is there something so unique about the way B & N conducts its business that Borders can't learn from it? Imitation is the sincerely form of flattery, perhaps; and perhaps is the shortest road to attaining your closest competitor's profits, too. So let's be conservative, taking into account an iffy economy, and value Borders, at least for the near-term (3 to 6 months), at $16-$18 a share. My feeling is, people may put off buying a new car for a year or two, but a lot of the customers at these big box bookstores are educated, upper middle class, and looking for a relatively cheap place to spend a few hours relaxing and destressing. While at the bookstore, an impulse purchase of a book or magazine -- well, assuming Borders continues getting its inventory act together (which is already starting to bear fruit: just visit your local Border and take a look at the shelves these days) -- is not as subject to the fickleness of the economy as is, say, the purchase of a new piece of furniture, or remodeling a home. A bookstore may be a specialty retailer, but it's not subject to quite the same ill winds of a decline in consumer confidence (and purchasing power) as is a bix box home improvement store.

    The stock may bob and weave, but this stock is a screaming "buy" at any price under $10.
    Apr 27 01:59 am |Rating: 0 0 |Link to Comment |View article

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