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SVU Rockets!

posted Mar 27, 2011, 5:02 PM by Mohit Kumar
Our recent addition in the small cap space, Supervalu (SVU) surged last week after its Q4 profit surpassed analyst expectations! During the quarter, the grocer earned $95 million, or 44 cents a share, compared with $97 million, or 46 cents, in the year prior. The shared nearly spiked 20% in a single day taking our current returns on SVU to about 50% in under 3 months!

It reported a gross margin of 23% and working capital management was good. SVU has still a lot more to prove by reversing its loss in market share. It was yet another quarter of negative identical-store sales and declining operating margins, but I was not expecting any improvement as yet.

For now, we will relish the gain and continue holding this "Very High" risk position.
If you are looking to play safe, you may choose to exit here and lock this hefty gain in such a short time! Congratulations!

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