Every so often, typically around holidays, I ignore the advice of the great Satchel Paige, who allegedly said, "Don't look back, something might be gaining on you", and take a look back at what was happening a year ago, through the eyes of the Real Money columns I wrote at the time. That idea is ever more interesting now, because last year at this time, we were not in the midst of a pandemic, and had no idea what was in store for us in the coming months.
One year ago today, I focused on the Fitbit - Google deal, which had been announced a few weeks prior. Interestingly, that transaction, in which Alphabet (GOOGL) was to purchase Fitbit (FIT) for $7.35/share is still not done, as one agency after another reviews the transaction. The market may believe that it is close given FIT's move toward the deal price, but this has gone on for far too long.
I was also writing about Hibbett Sports (HIBB) , a name I'd had some success with a few years back, during one of the many times that retailers were presumed dead. You'd think that a small specialty retailer such as HIBB might have tanked over the past year due to the pandemic, but that could not be further from the truth. In fact, HIBB has risen 64% over the past year, closing Wednesday at $46.86 after closing as high as $55.40 last month.
The company has blown away earnings estimates the past two quarters, earning $1.45 in third quarter (vs. the 45-cent consensus) and $2.95 in the second quarter ($1.15 estimate). Third quarter results released last week showed a remarkable 21.2% same store sales increase, with e-commerce sales growing nearly 51%, representing 13.2% of total sales.
What's more, the balance sheet remains solid. HIBB ended the quarter with $178 million or nearly $11 per share in cash, and no debt. Over the years, the company has been voracious at buying back stock, reducing shares outstanding by 36% over the past 6 ½ years. While buyback activity has slowed since the pandemic, there is reason to believe that it might pick up again at some point, perhaps not at these prices, given that HIBB trades at a five year-high, but as opportunity presents itself.
HIBB trades at about 13.5x next year's consensus estimates, calling for earnings per share of $3.48, which is down from this year's $5.84 consensus, which already has three quarters in the book.
I am not a buyer of HIBB here - the "easy money", if there is such a thing, has already been made - although I am impressed by what HIBB has been able to accomplish under difficult circumstances.
(Alphabet is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL? Learn more now.)
