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Stocks F / Friedman's Inc.


Subject:  Re: frdm? Date:  12/9/2000  12:34 PM
Author:  mdudley69 Number:  14 of 28

The prior posts about how frdm may be bleeding
assets to a co-owned company, and chalking up
vanishing credit card earnings, whether true or
not, is enough to scare me off. Is the co-owned
Crescent privately held? There are insider
buys but the cash amounts are penny ante-
enough to show up on insider buying screens
but not much more. It's been dogging it
for two years, and 'undervalued' for more than a
year. If the company can't come thru with
shareholder value during the recent growth
economy, what's it going to do now?

It was however recommended as part of an article
on co.s trading at less than book value at
www.individual (archive, analysis
section, "screening for stocks below book value"):

That said, the discount jewelry retailer Friedman's Inc. (NASDAQ: FRDM - Quotes, News, Boards) trades at a mere 34% of its tangible book value of nearly $14 per share. At $4.75 per share, the stock also looks ridiculously cheap versus its trailing 12 month earnings of $1.38 per share, and the $1.62 per share it is projected to earn in 2001.

Not only has the company been posting 21% revenue and 38% earnings growth over the past two years, but Friedman's has also been actively reducing its debt. Insiders have bought 33,500 shares in the past year.

While we've met with Friedman's management in the past, and continue to think that the stock offers tremendous value, the stock has been cheap for a while now. For one thing, Friedman's is very small ($69 million market cap) compared to other jewelry bellwethers, like Tiffany (NYSE: TIF - Quotes, News, Boards) at $5 billion and Zales (NYSE: ZLC - Quotes, News, Boards) at $928 million.

Friedman's stock is also fairly illiquid, trading an average of just 46,000 shares a day. A combination of these forces all but force the most patient of value investors away from this ultra-cheap company.

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