Design Within Reach, a nice small cap for your portfolio
Source: http://www.financepuzzle.comPosted on Sunday, September 14th, 2008 | In Market Commentary
Would you be willing to pay the book value of a stock that is growing the revenue line versus prior year? I know I would, especially in this current market environment. Looking at my daily value stock screen, I came across a nice find with Design Within Reach Inc. (DWRI).
If you are not familiar with this company, DWRI provides distinctive modern design furnishings and accessories. It markets and sells its products to both residential and commercial customers. As you can see in the 5 year stock chart, it has been a tough road for this retailer since it went public back in July 2004.
What brought me to this stock, with a current market capitalization of $55 million, DWRI’s Price to Book Value has been hovering around 1.0 for the last three quarters. Along with the price to book ratio, the price to sales ratio is at an attractive level of 0.21x. This represents about a 54% drop from the previous year quarter when sales have increased about 7%. Finally, DWRI’s top line has grown positively 9 of the last 10 quarters with improving gross margins…Please reference exhibit for the detailed financial metrics.
Since I am still saving to complete my first goal, I will elect to buy 1000 shares of DWRI for my paper-trade portfolio. I will measure this trade against the S&P 500 performance for the same time period.
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Author Disclosure: I do not own any shares of DWRI. This trade is considered a paper-trade and is being used for entertainment purposes.
Last 5 posts by Elias Tsepouridis
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 About Elias Tsepouridis (http://www.financepuzzle.com)
Elias Tsepouridis has 10 years of corporate financial management and valuation experience. He is a freelance writer who has managed his own portfolio for the last 5 years. Elias publishes and tracks all of his investments on his blog FinancePuzzle.com. His detailed analysis focuses on purchasing stock of businesses with long-term value and growth potential at a price that includes a safety of margin. Elias analyzes one stock per week, which is recommended by his subscriber base. |
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