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July 7th, 2022
Play it, Sam. For Old Times’ Sake.
One of the most misquoted lines in cinema history comes to us from the film, Casablanca. The line is usually quoted as, “Play it again, Sam” when in fact, Ingrid Bergman says, “Play it, Sam. For old times’ sake.” If you haven’t seen it yet, Ingrid Bergman’s eyes deliver a masterclass in acting. It’s a classic for a reason.
As I was watching it, I kept thinking about the misquoted line, “play it again” and then that got me thinking about Play It Again Sports. And then that got me to thinking about a potential recession and consignment and gently used items.
Yes, it’s frightening how my mind works in real-time, but sometimes the strangest things will give you a trade idea at the strangest times.
We know retail is suffering through inflation and supply chain woes. But companies who are able to take the used goods and “play it again” actually benefit from this type of market environment.
Which company offers industry-leading brands for the budget-minded consumer?
This one company has a brand that ranked #1 by Entrepreneur Magazine for the resale industry.
Keep reading…
Winmark Corporation (WINA) operates as a franchisor of retail stores that buy, sell, trade, and consign used merchandise primarily in the US and Canada. Some of the brands they own include, Play It Again Sports, Plato’s Closet, Once Upon A Child, Music Go Round, and Style Encore.
For those who want to invest in companies committed to sustainability, WINA fits the bill as well as they have been a leader in extending the life of used items since 1988. They have recycled 1.4 billion items since 2010 and are looking to combat the 21 billion pounds of textile waste that Americans send into landfills each year.
If you’ve been reading my articles for a while now, you know that I like to look for companies that have a track record of increasing earnings and revenue. Obviously, we have to give a bit of a discount to 2010, but this company checks a lot of boxes and has a beta of 0.77.
They have an operating profit margin of 65.50% and an annual dividend of 1.40%.
They have not been immune to the first half selloff, as they went from $270 down to $190, but it’s now in a bit of a consolidation pattern, bouncing off the $290 level.
WINA needs to break out to the upside of the wedge, but it recently crossed above its 50-day moving average and could go up to challenge its 200-day moving average, about $20 away. A breakout to the upside could put them back on the right track.
WINA does have earnings coming up on 7/13/22 and sadly, it does not offer options, but even those with smaller accounts can still pick up a handful of shares. Most brokers will let you buy odd lots without issue.
As the economy and consumer spending tightens, you have the potential to profit from a company whose business model is to play it again.
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Jeff
Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society