Pat Naccarato
Regis Corp.
RGS-N
PAST TOP PICK
Sep 10, 2008
(A Top Pick Nov 30/07. No change.) Hair cutting franchise with 13,500 locations from Wal-Mart to higher salons. Also have Trade Secrets products. Recession resistant. Have never had negative same-store sales in 80 years.
(A Top Pick Nov 30/07. Down 4%.) Largest services for haircuts and own Mastercuts, Supercuts, Hair Club for Men, et cetera. Has been affected by the weak retail environment but has been doing very well. Good defensive play and is cheap.
RGS operates and manages hair salons with brands like Super Cuts across North America. The company has been consolidating its foot print, closing less profitable locations, to increase its efficiency and has introduced a reward program and smoother in-store experience. Recently reported EPS were up over 30% and cash reserves are growing. We recommend setting a stop-loss at $15, looking to achieve $24 -- upside potential over 25%. Yield 0%
(A Top Pick Nov 14/24, Up 32.2%)Stockchase Research Editor: Michael O'Reilly
Our PAST TOP PICK with RGS has achieved its target at $24. To remain disciplined, we recommend covering half the position at this time and maintaining the stop at $15.
We reiterate the hair salon franchise company with brands like SuperCuts as a TOP PICK. The company just bought back 300 salons at 4x earnings -- good value. It trades at 4x earnings, under book value and supports a great ROE. We recommend trailing up the stop (from$15) to $17, looking to achieve $31 -- upside potential of 28%. Yield 0%
(Analysts’ price target is $40.00)
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