I bought Foot Locker Inc. (FL/NYSE) and the stock ended the day (Wednesday, 7/25) at $20.87. I'm swamped this week with non-blogging duties and will post my rationale for adding this new portfolio position in the next day or so. But I wanted to alert readers of the purchase.
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July 25, 2007
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I also have an order in for a specialty retailer. I guess we are both looking in the same market neighborhoods. Last weekend I went to the mall and ended up with a few Peter Lynch type observations that led me to my pick. Did you also come up with Foot Locker after a trip to the mall?
Foot Locker wasn't on my radar, but maybe it should be. I'll try to take a look at it this weekend and maybe even post my take on this stock.
Posted by: George | July 26, 2007 at 09:12 AM
Interesting pick. I don't see anything particularly attractive in Foot Locker--at least from a contrarian or value investing point of view. Then again, I"m just a newbie...
Posted by: Sivaram Velauthapillai | July 26, 2007 at 10:29 AM
For anyone who has read the intelligent investor, both FNL and FL currently meet most of Graham's criteria for the defensive investor. FNL has done so for much longer than FL.
Posted by: CJ | July 26, 2007 at 11:46 AM
Massive sell-off in the markets... anyway...
CJ, what criteria does Footlocker meet? It is trading above book value, it's price isn't necessarily low, and so forth. The P/E ratio is kind of attractive but I don't see it being as cheap as Graham would have endorsed.
I'm just a newbie investor so feel free to rebut my argument.
Posted by: Sivaram Velauthapillai | July 26, 2007 at 02:07 PM
George: No, I don't visit malls much. I came across Foot Locker in my normal course of reading.
Sivaram: There aren't a lot of classic Graham stocks out there. The best blog for following the ones available is Cheap Stocks. Regarding Foot Locker, I find the combination of sound balance sheet and potentially motivated management compelling. But I could always be wrong.
Posted by: John | July 27, 2007 at 12:06 AM
Sivaram, Graham outlines in his book several criteria for the defensive investor, off the top of my head I cannot remember all of them but I have a screen set up on my brokerage account which tracks stocks with the factors that can be evaluate as such. As to book value, Graham recommends for the defensive investor looking for a P/B ratio of not greater than 1.5, Last I looked, FNL was at 1.3 or 1.4 I think. There are other factors such as the debt to equity ratio, P/E, div. yield, etc. All of which FNL currently satisfies based on the stock screen. I do of course recognize that the stock screen is not the definitive answer to value investing but I think it can be one of several good places to start.
Posted by: CJ | July 27, 2007 at 04:19 PM