Update On Previous Picks – Staples, Casey’s and Republic Airways

Looking back on previous picks for this year so far, we have a bit of a mixed bag. These picks were Staples ($SPLS), Casey’s General Stores ($CASY) and Republic Airways Holdings ($RJET).

Lets start off with Staples, which was my pick back in January. This stock has been a disappointment since I made the pick when they were 13.83. I felt that the market was going to buy into the fact they were the 2nd largest e-commerce site in the world behind Amazon now. I thought this would also be reflected in the earnings, but at the time it was not. After Office Depot reported, they dropped down in the $11 range. When time for their own earnings was coming up, the price started to rise up back to $13. Unfortunately when they reported earnings they dropped back in the $11 range again.

I still feel they are a long-term play and will rise again, but you may have to hold on for a while to see it finally come to fruition. Analysts that are covering the stock also believe that it has a good shot at getting really good gains and with the dividend, it makes it attractive as well. So I see this as a buying opportunity to load up on more cheap shares. Several have a price target around $15, so that would be close to a 40% gain from the current price.

Then we have Casey’s General Stores. When I suggested them at 67.13, they stayed in a range right around that price not varying by more than a dollar or two. That was until they released their earnings report on the 9th of June and that’s when they rose to 75.12 on the 10th. That was good enough to get an almost 11% gain from when I suggested it.

They had good sales growth in all sectors of their business that beat their expectations of where they wanted to be. They have strong goals for the next year, and if they can meet it they continue to have quite a bit more upside. Several analysts are looking for a price to eventually be in the $80+ range.

Finally, we have Republic Airways Holdings. They have been on a bit of a roller coaster ride. When I suggested them on February 27th, they were at $9.58. Then after that they eventually dropped down to a low of $7.97 on April 14th. Hopefully you used that as an opportunity to buy some more shares cheap as they eventually went as high as $11.18 on June 9th.

They’ve seen their air traffic increase by 15% in May and recently an analyst raised their price target to $17 from their previous $13 target. So things are looking up if you continue to hold on to the shares.

From the period of my suggestion, to their most recent high on the 9th, they have gained almost 17%. Not too shabby.

I will update soon with some more stocks to take a look at. Happy investing!

Casey’s General Stores – ($CASY) Stock pick for 2-18-14

Casey’s General Stores ($CASY) has a unique business model that keeps them protected from the price wars of the larger chains. Many of its stores are in regions with a population of 5,000 or less which aren’t profitable for the bigger retailers, so they have a better handle on their market.

According to a survey, the convenience store market size was around $575.6 billion in 2010. It is expected to grow at a compound annual growth rate of 11% during the period 2011-2014 to reach a market size of $856 billion. Total convenience store sales include fuel as well as in-store sales. These stores are very popular with consumers who are pressured for time, as they have to spend less time shopping.

Gas stations are a highly competitive and low-margin business. During the second quarter, Casey’s did very well on its fuel margin environment, resulting in an average margin of $0.167 per gallon compared to $0.149 per gallon in the same period the previous year. For 2014, the fuel margin is ahead of their annual target, at $0.194 per gallon

They partnered with Hy-Vee in a fuel-saver program. Same-store gallons sold in stores that participated in the fuel-saver program increased about 7% in the second quarter, resulting in overall same-store gallons sold in the quarter climbing 4.2% versus the previous year’s quarter.

The grocery and other merchandise sales grew 10.2%, and this was more than what the company had hoped for. The prepared food and drink category continued its strong performance and grew 12.3%.

On the back of strong performance across all segments, and 5.5% revenue growth versus the previous year’s quarter, Casey’s second-quarter earnings per share soared 24% to $1.06 compared to $0.85 a year ago.

Right now they are 12% off their most recent 52- week high back in December (Price as of 3:38pm is $67.13). I expect you will see them making a run back at the high of $77.58 in the next 3 to 6 months. This is supported by options trades in the market that suggests folks are looking for this level. Also, using Thinkorswim’s Prophet tool (as seen below), it sees the chart for Casey’s in a bullish pattern and is looking for a price in the range of just under $73 to almost $79 in the next several months.

casy think
The stock has a P/E ratio of 19 which makes them fairly inexpensive. Plus, it has a dividend yield of 1.10% so it makes it a bit sweeter for you. They have been doing well in the convenience-store space and has outperformed peers. Looking at the company’s expansion moves, it can grow further and bring long-term benefits to your portfolio.