Why the Drop?
1. Management has stated that the opening of
new stores in Costa Rica and Honduras were
going to shrink same-store sales while boosting
overall sales. This was because the new stores
would cannibalize the older stores.
2. The company has produced years of high single-
digit and low double-digit growth. That pace
can’t be held up forever.
A Buying Opportunity?
PriceSmart’s P/E Hasn’t Been This Low Since Mid-2011
The Bullish Argument
There are two key things to keep in mind:
1. The real growth story comes from opening up
stores in South America, where the company is
doubling its presence by year’s end.
2. With only 31 stores in the comparative base,
it’s easy for one or two stores falling behind
to make a big difference in overall same-store
What to Beware Of
If they only grow
at 1% per year, this
stock isn’t worth
28 times trailing
While I think PriceSmart is worth looking into right now, it's
important to remember that lots of American companies have
plenty of exposure abroad. Apple is one such company.
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