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Wednesday, April 7, 2010

Small Cap Stock Analysis - Archies

Many of you would have visited Archies store sometime in your life.Small Cap Stocks To Buy - ArchiesYou must have seen youngsters visiting the store and making purchases regularly but did you ever thought to buy stocks of it? Let's have a look at the possibility of investing in stocks of Archies to be part of this market.

The Company is engaged in the business of retailing of gift items, greeting cards, perfumes and stationary items. The Company operates in three business segments: Greeting Cards, Stationery and Gifts. The Company's wholly owned subsidiary is Archies Online.Com Limited.

Small Cap Stocks To Buy - ArchiesIf we look at the income and sales turnover data, it shows us constant growth of ~15-20% on Y-O-Y basis since 2005. At the same time operating costs are also increasing in similar ration. The reported net profit was on constant increase till year 2008 but went in negative in year 2009. EPS too nosedived in similar manner from 12 to below zero levels.

If we look at the past 3 quarters (Jun - Dec. 09), sales and net profit is on constant increase. And so is the EPS. This EPS collectively for 3 quarters comes at 11.2 With March quarter numbers to be added, it could easily go above 14-15. If we take the forward EPS at say 14 levels, stock is trading at 6-7 PE ratio at CMP of 95 which is very attractive level from investment perspective.

Also, it's book value of Rs. 118 makes it an small cap value stock to buy at this level.

Looking at the stock value, attractive stock valuations, one may buy stocks as short to medium term investment with a target price of Rs. 140 - 150.

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