Obscure Retailer Worth Owning: Ingles Markets
IMKTA is a failry unheard of grocery chain, as it is most prevalent in my neck of the woods in Tennessee (specifically East TN). But their small size shouldn't deter you, as they are delivering great results.
The most recent report featured a beat and a raise on guidance. Based on FY2018 estimates, it's trading at 11.5x (vs 5yr average of 15.8x). The P/S ratio is a mere 0.16, and it's trading about 0.42x it's enterprise value ($1.52bil enterprise value vs. $642mil market cap). Also, it's trading at about 1.16x book value ($28.64/share).
Earnings have grown significantly as cost cutting measures implemented have bolstered the bottom line. E.P.S. was up 112.3% vs the same quarter last year; on a t.t.m. vs previous t.t.m. basis, earnings are up 102.5%. Gross margins and operating margins have improved significantly, too, and they are better than peers by a wide margin. R.O.E. over the past twelve months has been 17.9%; R.O.I over the past twelve months has been 6.6%.
Total debt/assets on a trailing twelve month basis is 50%, but they have made meaningful strides paying down debt, as well as buying back shares.
They pay a decent dividend of 2.1%, but with the low payout ratio of 13.6%, I suspect we'll see some growth in that dividend very soon.
I bought on the last dip to sub-$30's by taking delivery on calls that worked out perfectly. Now I'm looking to add... in fact, I've had orders in the past 2 days that didn't hit my price and fill. But there's a good chance I get an order to fill today. Why am I quick to buy?
Shares have pulled back perfectly to the 61.8% retracement of the last advance, and that coincides with the 50dsma, which recently had a bullish cross over the 100dsma. I suspect we'll see the 50 rise back above the 200 soon. Support is at $31.60 (where it's at... confluence of moving average support and two Fibonacci retracement supports), with additional support at $30.00. We need to have a stop loss set slightly under the lows at $27.50 (I doubt we'll need it).
This is a great name to consider for a small chain store (especially my East Tennessee kinfolk) with excellent fundamentals, and it's done exactly as planned by pulling back after a nice rally. So I'm adding, period. Forget the KR, WMT, COST, TGT, and other big box names... this is the one to own!
PS - Option open interest has calls outnumbering puts by 5.7:1 (vs average 4.4:1), so options traders appear to be favoring the long side, too.
BUY BUY BUY!
Happy trading!
The most recent report featured a beat and a raise on guidance. Based on FY2018 estimates, it's trading at 11.5x (vs 5yr average of 15.8x). The P/S ratio is a mere 0.16, and it's trading about 0.42x it's enterprise value ($1.52bil enterprise value vs. $642mil market cap). Also, it's trading at about 1.16x book value ($28.64/share).
Earnings have grown significantly as cost cutting measures implemented have bolstered the bottom line. E.P.S. was up 112.3% vs the same quarter last year; on a t.t.m. vs previous t.t.m. basis, earnings are up 102.5%. Gross margins and operating margins have improved significantly, too, and they are better than peers by a wide margin. R.O.E. over the past twelve months has been 17.9%; R.O.I over the past twelve months has been 6.6%.
Total debt/assets on a trailing twelve month basis is 50%, but they have made meaningful strides paying down debt, as well as buying back shares.
They pay a decent dividend of 2.1%, but with the low payout ratio of 13.6%, I suspect we'll see some growth in that dividend very soon.
I bought on the last dip to sub-$30's by taking delivery on calls that worked out perfectly. Now I'm looking to add... in fact, I've had orders in the past 2 days that didn't hit my price and fill. But there's a good chance I get an order to fill today. Why am I quick to buy?
Shares have pulled back perfectly to the 61.8% retracement of the last advance, and that coincides with the 50dsma, which recently had a bullish cross over the 100dsma. I suspect we'll see the 50 rise back above the 200 soon. Support is at $31.60 (where it's at... confluence of moving average support and two Fibonacci retracement supports), with additional support at $30.00. We need to have a stop loss set slightly under the lows at $27.50 (I doubt we'll need it).
This is a great name to consider for a small chain store (especially my East Tennessee kinfolk) with excellent fundamentals, and it's done exactly as planned by pulling back after a nice rally. So I'm adding, period. Forget the KR, WMT, COST, TGT, and other big box names... this is the one to own!
PS - Option open interest has calls outnumbering puts by 5.7:1 (vs average 4.4:1), so options traders appear to be favoring the long side, too.
BUY BUY BUY!
Happy trading!