The good news is that my 5 Favorites for the Rest of 2017 are doing OK so far, up an average of 9.8% over the past month. The bad news is that it only has been one month; the sobering truth is that the markets have performed extremely well during that period and the rising tide has lifted all boats. The Russell 2000 and Russell Microcap Indices are up 7.31% and 9.17% respectively, which puts the performance of my "Fave 5" in perspective. While I'm not disappointed so far, you must present the full picture when talking about returns. Truth be told, I'd be happier if the Fave 5 were up 5% and the markets down 5%.
All but restaurant name Zoe's Kitchen Inc (ZOES) are in positive territory. Down more than 50% year to date and 2% over the past month, Zoe's is out of favor with investors in an industry facing several challenges. This may seem like an odd place for a self-proclaimed value investor to be, and I would not disagree.
Retailer Hibbett Sports Inc. (HIBB) , up 16%, is the top performer. The stock has been trounced this year along with many other associated retailers, and this is a case where the severe punishment doled out by the market did not seem to fit the crime. There are indeed severe challenges for the industry, and it's likely this stock never again will see the $60 where it once traded. However, it has rebounded more than 50% off of its Aug. 18 intraday low and currently trades for 11 times next year's consensus earnings estimates, 1.39 times net current asset value, and 0.91 times tangible book value.
Fitbit Inc. (FIT) , up 15%, has been the beneficiary of a modestly positive buzz about its new Ionic smartwatch, along with some potential medical monitoring uses for the device. Still, investors overall have remained somewhat cautious, waiting in part to see how Ionic will do versus Apple Inc.'s (AAPL) new Apple Watch Series 3. The company remains awash in liquidity, with an amount that is about 42% of the company's market cap in cash and short-term investments.
FreightCar America Inc. (RAIL) , up 8%, continues to fly under the radar, although it has had a decent run year to date and at times has delivered better-than-expected results. Still a double-net trading at 1.55 times net current asset value, the company remains highly liquid, with nearly $11 per share in cash and marketable securities and no debt. The slowdown in this cyclical industry has been the major concern, but FreightCar America appears to have more than adequate resources to ride it out. I still believe that this company may make for a great acquisition candidate.
Last, not least, but a mystery in the eyes of many investors, Biglari Holdings Inc. (BH) is up 12% while still trading near a five-year low. As is typical, there has not been any news to report, volume remains very low, and it does not take much to move the stock. Here's a fun fact: BH currently trades at about 18 times the approximately $38.6 million in dividends it has received in the past year from a nearly 20% stake in Cracker Barrel Old Country Store Inc. (CBRL) . There hasn't been much else fun about being a BH shareholder, especially among those of us who believe that there is a great deal of unlocked value in the company. The next shareholder meeting in April should be very interesting, especially if Biglari shares are trading at or below current levels.