Matthew Kerkhoff, options expert and editor of Dow Theory Letters, continues his 14-part educational...
Vermont Teddy—A Bearish Pick
09/25/2002 12:00 am EST
Having followed hundreds of advisors for two decades, it’s hard to impress me with a new advisory service. Neil George has. In his By George! e-mail service he shows an uncanny knack of uncovering extremely interesting and relatively unknown investment opportunitites. A recent stock recommended by Neil—a teddy bear manufacturer—gives a new definition to “bear market” investing.
Vermont Teddy Bear Co. (BEAR NASDAQ) is a designer, manufacturer, and direct marketer of teddy bears and related products, sold through the Bear-Gram delivery service, company-owned retail stores, direct-mail catalogs, and the company's Web site.
Says Neil George, “We first looked at this stock in late May; its performance has been flat since then, while the S&P 500 has lost 18% over the same period. Vermont Teddy Bear has been able to boost its sales, and it has maintained solid margins. It's relatively small and not well known; as a result, the BEAR shares haven't attracted much investor interest. Indeed, we consider the shares cheap, trading at a near 40% discount to trailing revenues. And it gets better: the company announced that it's planning to buy back shares, which might give the market more reason to take a peek.”