The most important metric when fishing through this pool of rubble is net cash per share/price. Before I could even contemplate a turn around, I need to be reassured the stock will not go all the way, to zero.
In my opinion, here are the names with the best cash positions.
ZNGA, SNE, EA, IRBT, CAJ, FB, DELL, LXK, NILE, GME, CMG, COH, DECK, NFLX, NOK, RIMM and GRPN.
There, I’ve narrowed the field.
Now I want to look for growth potential. Without growth, there will be not be a sustainable turn around.
GRPN, EA, CMG, ZNGA, COH, DECK, NFLX, and CAJ.
Pure wreckage factor. What stocks are beaten down the most. I know that seems like a simplistic theory, buying stocks that are down the most. However, sometimes the biggest winners are the stocks that get sold off the most, unduly of course.
ZNGA, GRPN, CAJ, DECK, EA, TIF, CMG, COH, NFLX
Ok, that was no help. All of those fuckers are beaten down. Let’s try FPE ratios under 20x.
DECK, EA, GRPN, COH, TIF
Last but not least, full scan of the fundamentals by The PPT (gross margins, p/b, p/s, PEG ratios, debt/equity, profit margins).
DECK, COH, TIF
There you have it: my top buy and hold picks for discounted brands are DECK, COH and TIF. Those are my methods and they’ve served me well. Going with the highly speculative names, like EA, ZNGA and GRPN, offer a much greater potential upside. However, it is my belief, the above names will give you a more comfortable ride, chauffeured by gentlemen in top hats.