When Bed Bath & Beyond (BBBY ) tumbled to 35 in March from its 52-week high of 44.09 on Nov. 11, Marion Schultheis, at investment firm J&W Seligman, quickly bought more shares. It was a rare chance to sign up for long-term gains, she says. The stock is now at 39.4. The company owns and operates 700 household superstores. Recent quarterly results showed a solid margin increase from improved productivity -- implying earnings growth of nearly 20%, says Schultheis, who sees the stock at 50 in 12 months. Since 1993, Bed has had yearly earnings growth of at least 21%, notes Amy Ryan of ThinkEquity Partners, who pegs the stock a buy. That 21% record in part caused the stock's slide: Earnings this year fell short, after a change in accounting for leases and expensing its stock options. Ryan forecasts earnings this year of $1.88 a share on sales of $5.8 billion, up 13.9% from 2004's $1.65 on $5.1 billion. For 2006, he expects a 19.5% jump, to $2.21 a share on $6.5 billion.The balance sheet is clean, with no long-term debt, notes Ryan, and cash of $1.2 billion.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial