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Company name Gannett Co., Inc.
Stock ticker GCI
Live stock price [stckqut]GCI[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Fair
Sales growth Poor
EPS growth Poor
P/E growth Poor
EBIT growth Poor

ANALYSIS

Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $0.82
Target stock price (averages with growth) $1.89
Target stock price (averages with no growth) $3.69
Target stock price (manual assumptions) $9.27

The following company description is from Google Finance: http://www.google.com/finance?q=gci

Gannett Co., Inc. is an international media and marketing solutions company, delivering content and services across an integrated, multi-platform portfolio. The Company’s portfolio of national brands includes USA TODAY and CareerBuilder. The Company’s properties cover a range of geographies, demographics and interest areas. The Company provides consumers with the information they want and connects them to their communities of interest through multiple platforms, including the Internet, mobile, tablet, print publications and television (TV) stations. In January 2011, it acquired Reviewed.com. In August 2011, the Company acquired US PRESSWIRE. In November 2011, it acquired the mixed martial arts Web site, MMAjunkie.com, and purchased a minority stake in ShopCo Holdings, LLC. During the fiscal year ended December 25, 2011 (fiscal 2011), CareerBuilder acquired JobsCentral. In January 2012, the Company acquired Fantasy Sports Ventures (FSV) and Big Lead Sports.

 

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.

 

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Company name Lakeland Industries, Inc.
Stock ticker LAKE
Live stock price [stckqut]LAKE[/stckqut]
Confident Investor Rating Poor

The following company description is from Google Finance: http://www.google.com/finance?q=lake

Lakeland Industries, Inc. (Lakeland) manufactures and sells a line of safety garments and accessories for the industrial protective clothing market. The Company’s products are sold to 1,000 safety and mill supply distributors in the United States. These distributors in turn supply end user industrial customers, such as integrated oil, chemical/petrochemical, utilities, automobile, steel, glass, construction, smelting, munition plants, janitorial, pharmaceutical, mortuaries and high technology electronics manufacturers, as well as scientific and medical laboratories. In addition, the Company supplies federal, state and local governmental agencies and departments, such as fire and police departments, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control.
Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. As I have been repeating for the past couple weeks on this site, it is not possible to confidently invest in a company that is not currently profitable.

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I recently started a thread of discussion regarding why I avoid companies that are unprofitable. The topic is fairly long so I am breaking it up into several posts. You can see the first posting here.

This is the argument of lost opportunity costs. I understand that an unprofitable company could have an extremely significant increase in stock price as it regains profitability but why risk it? There are good companies to invest in that are well-run. Some of those companies, I list on my Watch List.

If an unprofitable company that obviously does not have excellent management (or it would not be unprofitable) does not make a comeback and continues to hemorrhage money, then your investment could drop significantly.  This is compounded by what you could have made from a well-run company.

Let’s do a quick example. Perhaps you invest in $10,000 in a company that is not currently profitable. Your theory is that the worst is behind the company and they are about to do much better. Your theory is that other investors will be impressed with this increased performance and make the stock price move up.  These two combined theories contradict recent historical reality.

First, the company did not effectively react to events that caused them to become unprofitable. Why do you think that this is the time for them to get their act together and reverse this problem?  What if you are wrong?

Second, the potential investors may not be impressed. What if the investment community wants to sit back and wait to see if the company can continue to be profitable? What if they wait for a quarter or two of continued improvement? It is not unusual for investors to wait 4-6 quarters before they believe that the company has fixed itself.

If one or both of your theories is wrong, your $10,000 investment could easily drop 10% in 6 months. Compare that to a good company that is simply executing like it always has and increases the stock price by 10% per year (or 5% in the same 6 months that you have been waiting). Your lost opportunity cost is not just 10% or $1,000, but is 15% or $1,500 of what it could have done in a well-run company.

If you want to be notified when I post about avoiding unprofitable companies, there are several straightforward ways to do this. You can subscribe to my feed in your news reader. You can also sign up for my weekly newsletter which will give you the articles for the week. Finally, you can subscribe to my Twitter account @ConfidentInvest.

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Company name Extra Space Storage, Inc.
Stock ticker EXR
Live stock price [stckqut]EXR[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Poor
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $49.69
Target stock price (averages with growth) $63.82
Target stock price (averages with no growth) $39.6
Target stock price (manual assumptions) $50.21

The following company description is from Google Finance: http://www.google.com/finance?q=exr

Extra Space Storage Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, manages, acquires, develops and redevelops professionally managed self-storage facilities. As of December 31, 2011, Extra Space Storage Inc. held ownership interests in 697 operating properties. Of these operating properties, 356 are wholly owned, and 341 are owned in joint venture partnerships. An additional 185 operating properties that are owned by franchisees or third-parties in exchange for a management fee, bringing the total number of operating properties, which it owns and/or manages to 882. The Company operates in three segments: property management, acquisition and development; rental operations, and tenant reinsurance.

 

Confident Investor comments: This is a very solid REIT. If you need real estate exposure in your portfolio, it probably doesn’t get much better than Extra Space [stckqut]exr[/stckqut]. At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

 

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Company name EDGAR Online, Inc.
Stock ticker EDGR
Live stock price [stckqut]EDGR[/stckqut]
Confident Investor Rating Poor

The following company description is from Google Finance: http://www.google.com/finance?q=edgr

EDGAR Online, Inc. (EDGAR Online) is a provider of eXtensible Business Reporting Language (XBRL) filing services, data sets and analysis tools. The Company also creates and distributes financial data and public filings for equities, mutual funds and a variety of other publicly-traded assets. Its data products provide fundamental financial information along with the source documents and are created through the use of a software that automates much of the data extraction and calculation processes. Its XBRL filing service uses parts of this data extraction and processing software along with personnel skilled in accounting, quality processes and additional tools to assist public companies in the creation of XBRL filings for submission to the Securities and Exchange Commission (SEC). The Company’s XBRL analysis tool is a software tool that assists users in analyzing both its own XBRL data sets and industry standard XBRL data files.
Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. It is not possible to confidently invest in a company that is not currently profitable.