Admittedly, one of my favorite methods of finding a good investment is to see what companies Jim Cramer doesn’t like, and consider buying them for the long-term. While this high-tech screener is not perfect by any means, it fits my contrarian values well and shows me many unappreciated and potentially undervalued companies. By leveraging Cramer’s influence on the general trading population, I can occasionally find short-term sales on great long-term investments.
He Has Spoken, Bearishly
The most recent company to pop up on my radar with this sophisticated screener was Omaha-based retailer, Gordmans Stores, Inc. (NASDAQ: GMAN). Posting a 40% drop since its 52-week high in April, many traders seem to be losing faith in the 98 year old department store chain. With a downgrade in hand from TheStreet, Gordmans is left with a stock price slightly above its IPO of $10.85 in 2010. Issuing the following statement, “The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time,” TheStreet argues that there is basically no upside to its current price — and I couldn’t disagree more.
Reasons For My Bullishness
While it may not be a true value pick, or a high flying growth story, I believe that Gordmans is simply undervalued, and will outperform the S&P 500 over the long-term future. As with any investment, I look for specific catalysts that will increase investor returns over the long haul. With Gordmans specifically in mind, the catalysts are as follows:
1). Revenue Growth
2). Strong Margins
3). Solid Financials
4). A “Buy” Valuation