PRICE SMART - good stock buy?

pasha · #1 10-18-2003, 10:48 AM

The exerpt below is from Motley Fool's web site: www.fool.com

Is Price Smart doing well in the DR and would it be a good stock investment at the $6USD or so level?

I think someone mentioned in another thread that PS is a sub of Costco, but apparently not...or I misunderstood...or something.

Best, P

...............

The PriceSmart is right

PriceSmart (Nasdaq: PSMT) has been sent to the corner wearing a dunce cap. The warehouse club operator that you've never heard of (their 26 retail locations are located in Latin America, Asia, and the Caribbean) has seen its shares drop sharply. Over the last two years, the stock went from peaking past $40 to roughly $6 today. Sure, domestic warehouse clubs have had their hiccups as well, but PriceSmart also has had to deal with everything from currency devaluations in the Dominican Republic to political and economic uncertainties in many of its other markets.

With a double-digit slide in comps last month and a painful third-quarter loss, PriceSmart isn't looking so hot right now. But it's worth noting that the company had been consistently profitable until its recent debacle. BJS Wholesale Club (NYSE: BJ) and Costco (Nasdaq: COST) trade at price-to-sales multiples three to four times higher. PriceSmart isn't worthy of similar markups in its present state, naturally; however, it is an attractive buyout possibility for stateside operators looking to enter PriceSmart's emerging markets.

Hillbilly · #2 10-19-2003, 11:52 AM

I was at Price Smart yesterday (Saturday) morning at 10:30. It was busy, but not like a Kroger or Grand Union would be in the States. There was plenty of parking and the aisles were not jammed. There were only four cash registers operating. I saw a lot of friends there, but they were mostly professional people with some money to spend: Former ambasssador and now consul in a major city, an excellent MD, a couple of good engineers, and so forth. I also saw some scruffy looking foreigners there, germans or swiss(?) and a couple of women, who by their dress were certainly "not from around here."

My wife spent nearly RD$10,000 in her monthly spree (which used to be around RD$6,000), but it still saves us nearly RD$8,000 over daily purchases of the same foodstuffs. So the basic premise of the operation is accurate.

The talk of devaluation is right on. Until the currency market stabilizes at whatever level, and salaries and so forth are adjusted to that level, any business that relies on imports is going to get hurt. Of course, if they stick on another 5% import tax...things will get very bad.

Buy it? Why not? the business plan is good and eventually things will level out....

Hoping it stays here....

HB

Ruffino1974 · #3 10-20-2003, 07:52 PM

well,
I was monitoring it today and even got a little taste. Guess what?

UP 6.3% for the day....

I never under estimate the power of DR1, but moving the prices of listed equities on a short post?

Must have had something to do with Hillbilly's endorsement.

Please e-mail me with "tips" in the future, prior to posting, and I promise to bring some of the profits to Santiago next visit, to invest in the local economy (beer).

pasha · #4 10-21-2003, 08:12 AM

Quote:

Originally posted by Ruffino1974
well,
I was monitoring it today and even got a little taste. Guess what?
UP 6.3% for the day....

Keep an eye peeled....can only imagine that it would rise sharply if Costco were indeed interested in a buyout.

Best, P

Golo100 · #5 10-22-2003, 04:17 PM

If you are so willing to invest in Price Mart stock, why dont you just get yourself a PriceMart Promerica certificate that pays over 20% a year just like I have now and risk it that way. Of course, if you invest just a little it wont hurt.

These certificates are available at their locations and can be cashed at their Avenida San Martin headquarters. They will pay you by check or cash at expiration, or automatic renewal.

TW

Ruffino1974 · #6 10-22-2003, 07:24 PM

Golo,

Thanks for the information. I have been reading your posts since you were just a "Tourist Watcher" and clearly you are in tune with investment opportunities in the DR.
I have some fixed income investments, but the funds I invested were earmarked for equities. After doing some research, I determined that PSMT seemed to be a bargain. I bought some and watched it for two(2) days and sold it for a handsome 8% profit. Regardless of the amount, an 8% yield in two days is enough for me. In fact due to a market down turn today, which I am sure you are aware of, I'm back into PSMT.

I would appreciate any and all information as to investment opportunities available in the DR, that you would care to share.

I would love to pick your brain in person, and I am willing to do it over a bottle of wine of your choosing on my next trip to Sto Dgo.

I also would like to thank Pasha and Hillbilly and will make a trip to Santiago on my next visit to thank the local contingent in person. I intended to stop during my last visit, when I went to Sosua to visit Eddy, but in my defense I drove through Santiago at night and I missed it. It seems that the lights were out.

adrianb · #7 10-22-2003, 08:49 PM

Promerica is a finance company based in El Salvador I believe:

http://www.promerica.com.sv/quienes_somos.html

As far as I know, you're buying CD's in El Salvador by doing this.

I don't think there is any affiliation with Pricesmart; they just rent the space like Codetel & many other companies also do.

mondongo · #8 10-22-2003, 10:39 PM

adrianb, Pricemart does have a subsidiary in El Salvador. Promerica is a bank based (?) in El Salvador. Pricemart and Promerica have an alliance. My guess is that Pricemart issues these certificates through Promerica.

mondongo · #9 10-22-2003, 10:52 PM

Rufino, no offense to your stock picking/trading abilities....doing research......buying a stock.......then selling it 2 days later for an 8% return can be best described as very fortunate....I for one do not know of any fundamental analysis methods that call for 2 day trades....so....spill the beans....tell us how you did it!!!

pasha · #10 10-23-2003, 03:21 AM

Quote:

Originally posted by Ruffino1974
Golo,

...I also would like to thank Pasha

in Germany on way to Berlin for a week or so. I agree that Golo and a few other guys always have good poop and want to shake hands at earliest opportunity.

Best, P