If you haven't read my golf baby boomer stocks with GOLF, Adams Golf (ADGF), Callaway Golf (ELY) and Fortune Brands (FO) check it out.

Golfsmith (GOLF) reported its second quarter and same store sales were barely positive at .05% and they are guiding to slightly negative same store sales for the rest of the year. Diluted EPS grew a very nice 25%. In retail same store sales are much more important than sales because total sales includes new store openings. If you can't grow your existing stores sales and open new ones to fast to take their place you get trouble. Just ask Krispy Kreme Doughnuts Inc (KKD) and their chart will tell you.
GOLF's results are not bad for a company trading for less than its net tangible asset value which is $47 mil. The stock bottomed out earlier this year, went on a short roller coaster and is still trucking along.

Fortune Brands (FO) earnings beat estimates but it was ugly. Sales were down in all their segments. Though, they will be sticking around and will do very well once the economy and housing improves. They just increased the dividend 5% on top of that 3% yield. I calculated that there would be a 15% return over the next five years from just dividends if management boosts the dividend 9% a year. I've held FO since 2001.

Adams Golf (ADGF) grew revenue well and gained market share. Adam's is barely a Net with $44 million in NCAV and a market cap of only $41 mil. ADGF looks like a pretty good deal here but I think these golf play stocks bought as a basket slowly over the course of this year will show a solid return in a few years.

full disclosure: long FO


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Bronco Drilling is now down below $17. Wexford Capital LLC is a 12% holder of Bronco Drilling (BRNC) and plan to vote against the proposed $18.25 bid for Bronco from Allis-Chalmers Energy. Wexford Capital sees Bronco worth $25-$30. Bronco is still growing well and may be a good buy. Helmerich Payne (HP) is another good oil and gas driller.

Alsius Corporation (ALUS) is a medical device company that develops, manufactures and sells catheter products to precisely control patient temperature in hospital critical care settings. They have been losing money every year since inception and the stock is up over 150% in less than two weeks. This will be a good short for a quick trade when it breaks down technically, especially if their earnings are bad on the 7th. In a brief look the balance sheet is healthy and revenue grew year over year.

"We have not yet generated sufficient cash from operations to finance our business... Our cash and cash equivalents on hand, and our projected cash flows, are not anticipated to be sufficient to take us to cash flow positive based on our business plan."


full disclosure: no position in BRNC ALUS HP
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TII Network Technologies, Inc. (TIII) would have a triple bottom around $1.30. I'm not sure why the market is punishing them. They more than doubled EPS last year and first quarter sales were up 5%, EPS came in positive at $.01 vs a loss last year. Their business seems somewhat cyclical so I guess that could be it or it's the $17 mil market cap. It is in NCAV territory.

TII CEO Kenneth A. Paladino said,"The improved margins and the operating profit in the current period results from the investment we made last year to consolidate our facilities and create a more efficient business model. As a result, we believe that we will continue to realize improved financial performance for the balance of the year."

Bio-tech Senetek plc (SNKTY.OB) is barely trading for less than net cash and has some really interesting projects including a treatment for aging skin, Invicorp, an intracavernous injection therapy for the treatment of male erectile dysfunction.


full disclosure: no position in SNKTY or TIII


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Rick talks on a wide range of topics from natural resources, contrarian investing to why he will invest in net current asset stocks. The Video .

A paper that back-tests Ben Graham's net current asset value stocks in different countries over decades and shows they often outperform the market over certain time periods. I'm trying to dig up Henry Oppenheimer's paper in the Financial Analysts Journal Nov-Dec 1986 called Ben Graham's Net Current Asset Values: A Performance Update that did a back-test of holding stocks selling for less than 66% of NCAV from 1970 to 1983.
The stocks were held for one year and replaced with ones with the same criteria. Over the 13 years they had a 29.4% return and beat the NYSE-Amex index which had an 11% return. The funny thing is the unprofitable ones returned 31.3% and the profitable only 28.9%. If anyone has any luck digging this up post the URL in the comments.

Adams Golf is filing their quarterly report on August 4th and have a conference call on August 5th. They expect second quarter revenues to be up maybe as much as 10% year over year. I think I remember them warning a couple quarters ago of some significant expenses in these recent quarters so I'm not sure how great EPS will be. Anyway, it's worth checking out. The stock has bottomed out and has been moving up all month.

Short Ideas
ALUS
RAMR

full disclosure: no position in ADGF, ALUS, RAMR
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