Investors can think of Town Sports as a leveraged, high yield (14% free cash flow yield and a possible 6% dividend yield) stock. The company’s return on capital is lower than most stocks featured in The Avid Hog. But the stock price is also much lower. That makes it a bargain.
America’s Car-Mart, Inc. (NASDAQ:CRMT) June 2014
For long-term oriented investors. Car-Mart has been consistently underpriced in its past and may continue to be underpriced in the future. There is no catalyst for double digit returns in the next 10 to 15 months. But there is a clear path to 10-15% annual returns over the next 10-15 years.
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Life Time Fitness, Inc. (NYSE:LTM)
Life Time Fitness is now beyond the highest risk phase of its growth. The future of Life Time Fitness's business is not in doubt. It is simply the same local model being repeated around the country. The finances are solid today. Investors should not get complacent. They need to watch Akradi carefully for signs of recklessness. Absent those signs, Life Time Fitness will make a great buy and hold investment.
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Village Super Market, Inc. (NASDAQ:VLGEA)
Village offers the probability of high single digit returns, and a 10% annual return is possible. There are very few opportunities for such returns in today’s high priced stock market. And many of those opportunities are leveraged. Village is an unleveraged company in a defensive industry. The stock combines adequate long-term return potential with low risk.