Walter P.
St. Louis, Missouri

Mark Guerrero
Dallas, TX

Charles Snell
Beverly Hills, CA

Robert Stroz
Reno, NV

Sitting Around the Table July 23, 2003 Dow 9136 NASDAQ 1701 S&P 983 July 23, 2003

JOIN NOW Get current investment trading insight & tips on today's top undervalued stocks

We are in good shape

We were sitting around the table today and discussing the stocks on our Stock Table as well as what is happening in the world. The news from Iraq is very positive. With the death of the two sons, the awesome power of the world's only superpower is coming down on the last hold-out, Saddam himself. It is probably only a question of time. A $25 million reward is capable of turning family members against family members. If you interact with governments and bureaucracies, the one overriding principle is that you don't want to be under the microscope. You see, governments have overwhelming resources. Look at organized crime. Once the government focused on organized crime and put teeth into the laws by creating RICO, crime families are probably 10% of what they were 25 years ago in power terms.

The United States is now focused on Iraq. There are and will continue to be mistakes. At the same time we must all realize that the power of this government is beaming like a laser on Iraq. There's a short fuse on this one because the American people do not like remaining in a country very long, no matter who or what the country is. Saddam will be dead and the whole region will be better off for it. The Mid East is already better off. No one can argue that the Israeli conflict is ten times better than what it was just a few months ago. It's amazing what a quick war will do to convince angry people to back off.

So where's the stock market?

The market is now in a waiting mode. Remember, it is a discounting (forecasting) mechanism. It tells you the future about 6 to 9 months ahead of time. The market has already told us that the country is going to go back into a period of prosperity early next year. It looks like it will be just in time for a Presidential election, no accident there. If we get another major move upward, it will be because the prosperity that the market is forecasting will be stronger than what everyone is expecting.

How about a few stocks?

Sure, why not, let's look at a couple. The first one is Landry's Restaurants. Let's explore this marvelous entity a little bit.

---

Landry's Restaurants LNY $19.90

The devastating rains in June took a toll on diners wanting to eat out in a seaside atmosphere. Their major operation is Joe's Crab Shack restaurants. Joe's represents 130 of the 280 plus restaurants that they own. The others are the Rainforest Cafés, Charthouse Steakhouses, as well as their Saltgrass acquisition.

Here's the deal in a nutshell. The stock was touching $25 per share just a few weeks ago. Had it gone to $30 we would have removed it from our Stock Table. It just didn't get there yet. What they announced was that some diners stayed away in June. Revenues for the quarter were actually ahead of forecast with $300 million versus the street expectation of $295 million. The problem was that Joe's Crab Shack which is their high margin business experienced a sales softening. We were looking for $1.76 this year. We have to lower it 2 cents to $1.74. Next year we were at $2.00, the Street is now telling us the number is $1.98.

Don't you love it, you knock 2 cents off a $2 estimate, and the stock trades from close to $25 per share to $19 and change today. This is our favorite stock for the year and we think it has $30 written all over it. That means we are looking for a fifty percent gain from where the stock is currently. Now to get there we need the stock to trade to 15 times next year's estimate. Landry's has averaged 16.5 times earnings for the last ten years. So what we are looking for is no big deal. It has a book value of $20.22 per share. It currently sells below book whereas the industry sells at 3 to 4 times book value. Folks, this stock looks like a solid 50% move from here. You should look at it right now.

---

International Business Machines IBM $82.60

Here's the deal. You have a turnaround in the economy in progress. IBM dominates the Information Technology aspects of the economy the way nobody else does. Do you think the American economy is going to turnaround and IBM not participate with it? Let's look at it another way. If IBM is going to have a somewhat difficult time than who isn't? We at StocksAtBottom.com believe that this stock will trade between $105 and $110 over the next 12 months.

---

Liberty Media L $11.06

Liberty Media is now transforming itself from a closed end venture capital operation to an operating company. As such, we believe that the difference between its net asset value and the price the stock sells at will finally begin to narrow. This would take the stock up into the high teens. After that, it's up to John Malone to show us what he can do with this company. It's a buy right here.

---

Johnson & Johnson JNJ $51.94

This is the premiere medical products company in the world. Over 100 years of growth. It has no comparison among publicly traded companies. No one else has been able to establish the track record or creditability that JNJ has. Last quarter, this was the worst performing company in the Dow Jones 30 stock index. Watch what happens this quarter and in the next few quarters to come.

---

Your Friends At

StocksAtBottom.com

JOIN NOW
Get current investment trading insights
& tips on today's top undervalued stocks