Peter HodsonCoolbrands (A) Sold to NestleCOB.A.TOTOP PICKOct 19, 2010
Are buying a company from the founder of Block Buster. They have 60 million in cash and are going to go on an acquisition spree. The company is ok. Have organic growth. This was brilliant.
Came on tough times over the last couple of years. It seems they are selling off all of their non-core assets at this time to pay down their debt. Is almost now relatively debt free.
This one has been a basket case. They know what they need to do, but have been reluctant to do it. There is an asset there so it won't go to zero, but there are better companies out there.
Has never owned this one. Not a favourite. Not sure that the long term earnings growth is there. A bit challenged now that they've lost the Weight Watchers brand.
When they did their "Cash Flow on Enterprise Value" valuation, this one went through the roof. Had about $4 million loss in earnings, but about $6 million in write-offs. All that they lost from Weight Watchers will be re-established with other products and other product lines.
You have to be brave to buy this stock. Their earnings dropped along with the stock price. Not just Weight Watchers alone, but across their entire product line. Corporate governance problems as well.
Trades at a fairly reasonable valuation at below 10 X. Suffers from a credibility issue. Continuing to acquier new assets. Longer term, they should do well. Management is moving in the right direction by getting rid of their dual share class and bringing in a more independent board.
A great business and a great area. Cheap relative to its competitors. Has been a poor year for it. Might be worth a risk to put a bit of money in it to see if it cango up from here.
Missed their numbers. Won't know by how much until after 5pm Jan 18. The generation of free cash flow will be much lower with the loss of their contracts. On a valuation basis, market would probably jump in at $6.