Saturday, December 11, 2004


The readers of this blog seem to be drawn to low dollar speculative stocks. How about taking a look at Winn-Dixie.

WIN has a major advantage over SIRI; it has 11 Billion of revenues. Granted the grocery store business, a low margin business, has been decimated by Wal-Mart. Wal-Mart has simply operated efficiently enough to beat the prices of all comers.

WIN has recently showed signs of saying enough is enough. The company is cutting costs and closing unprofitable stores. The company replaced its chief exec. The company is thinly traded and not liked by analysts. I rate this one risky but with very high potential.

Some years ago, Food Lion made its owners very wealthy. At the time, I could not understand how a grocery store could go up and up and up in price. However, WIN fits the profile of the kind of company I think will do well over the next 5 years.

Friday, I sold my families shares in Circuit City (CC). This was tough because the stock was good to us for the past two years. However, while I know that consumers are going to buy lots of gadgets over the next few years, I am not keen on the profit margins that will be made by the big retailers. Furthermore, Best Buy still seems to have CC's number. I am confident in the business models of Dell and AMZN, I am sure that Wal-Mart will continue to grow, and I think CC will do ok. However, I wanted to raise some money to buy Gemstar (TV Guide) as I believe that Gemstar will win as a result of the tug of war being played out by Liberty Media and News Corp.

If I did not already own Dell and AMZN, I would buy them first. However, I will probably buy a few shares of WIN next week. You may recall that I purchased Continental Airlines a month or so ago. I am not afraid of buying turn-around stocks. I have the stomach to own CAL and WIN. So far, I am up 30% in CAL but the airlines are certainly not out of trouble. WIN is in just as dire a position because it is fighting Wal-Mart. I have no idea if the new management will get rid of the liquor stores, the gas stations or the pharmacies. Who knows, they may keep these and dump the grocery stores. The key thing is that the controlling family is finally willing to try to maximize value. For all I know, they may put the whole company up for sale. This is a turn-around play but I like the chances.