Looking Way Past Vodka In Poland

By Gene G. Marcial

Bottoms Up
Central European Distribution (CEDC ) is a play on spirits -- the intoxicating kind. It is the top distributor of vodka in Poland and a big importer of whiskey, wine, and beer. Based in Warsaw, its NASDAQ-traded stock is on the rise in a soggy market, up from 18.74 in May (adjusted for a 3-for-2 split in June) to 23.31 a share. "It's a gem of a value play: still off the radar of big investors -- and underpriced," says Steve Cohen of investment firm Kellner DiLeo Cohen, which owns shares. With Poles favoring imported beer and wine, which bring higher margins, Central's profits should expand further, says Cohen.

Beverage sales have jumped in Poland since it joined the European Union, which cut -- and in some cases scrapped -- duties on liquor imports. Joining the EU, says Cohen, could pave the way for Central to penetrate European markets. His 12-month target for the stock is 36, based on earnings forecasts of $1.30 in 2004 and $1.55 in 2005, vs. 96 cents in 2003.

Investment firm Brean Murray, which has done banking for Central and rates it a buy, notes the company has met with Polish brass to buy Poland's biggest -- state-owned -- vodka distiller. That would make Central a producer-distributor -- which should boost its stock.

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.

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