Playboy (PLA): Bunny buy
"Playboy Enterprises (NYSE:PLA) is a speculative stock, with plenty of potential but also downside risk," suggests Alex Green. In The Oxford Club, he eyes the firm's turnaround potential.
"When you consider that Playboy Enterprises has a market capitalization of a little over $100 million, you begin to see how undervalued this stock is.
"In 2006, Playboy opened an entertainment venue at the Palms Resort in Las Vegas, including a casino and nightclub. Early results are good given the current economy. The company is in the process of building its second such destination in Macau.
"Moreover, Playboy is under new management. Hugh Hefner’s daughter Christie – after struggling at the helm for years – finally stepped down last year. Jerome Kern is now interim Chairman and Chief Executive.
"Kern says the company will focus on licensing and casinos and cut the money-losing publication’s frequency, reduce its circulation, or raise prices. (Fortunately, publishing comprises less than a quarter of the company’s revenue base.)
"We’ve more than doubled our money in Playboy since we began recommending it a few months ago. However, selling at less than 40% of net sales, Playboy is essentially a value play and potential turnaround situation."
