As a value investor, I am wired to like the underdog, the longshot, the comeback story. It's the same in baseball, and this summer's story for me is that of Joe Beimel, who pitched in the big leagues for 11 years, before hanging it up at age 38 after a 2016 stint in AAA ball. Beimel went on to start Beimel Elite Athletics, which essentially helps pitchers improve their performance. The techniques must work, because Joe Beimel, who threw in the high 80's during his career, discovered at age 44 that he can now throw 95 mph. He recently signed with the San Diego Padres AA San Antonio Missions, and is attempting to get back to the big leagues. So far, he is 0-1 in 4 games, but with a 2.25 ERA and four strikeouts in four innings.
This could be 2021's version of The Rookie, where high school teacher and baseball coach Jim Morris made it to the majors at age 35, or the story of former Phillie Chris Coste, who bounced around the minors forever, before getting to the show at age 33. The odds are stacked against Beimel, old enough to be the father of many of his teammates, but that makes the story all the better.
Fashion retailer Cato Corp (CATO) continues its own comeback run, and despite giving back 9% over the past four trading days, is up 68% year-to-date. This is a company that was considered all but dead like a lot of other retailers during the pandemic, but still had something in the tank, namely a great balance sheet. CATO wisely ditched it's big 33 cent quarterly dividend, and emerged from the pandemic and latest quarter with nearly $8.50 per share in cash and short-term investments, and no debt. CATO literally has just over half of its market in net cash. It also reinstated the dividend in May, albeit at a significantly lower 11 cents/quarter, one-third the previous amount. But that's a start, and frankly, the last dividend was too high in my view.
CATO's comeback is not complete, though. The company needs to build on last quarter's profitable results, which boasted a 9.3% net profit margin. There's some room to increase the dividend, and still buy back stock. CATO has been a serial repurchaser of its stock and has reduced shares outstanding by about 22% over the past five years.
Women's fashion retail is as competitive as major league baseball, and CATO is attempting to prove that it can compete, and make money doing it. Interestingly, the company still garners no analyst coverage, and has continued to fly under the radar.