Share Prices In The USA- The Quest For Capital
Quest Diagnostics To Plunge 16%? Here Are 5 Other Price Target Changes For Thursday
- Citigroup cut Quest Diagnostics Incorporated (NYSE:DG Citigroup analyst gnostics shares rose 0.9% to close at $149.27 on Wednesday.
- Deutsche Bank cut the price target on Target Corporation (NYSE:TGT) from $183 to $144. Deutsche Bank analyst Paul Trussell downgraded the stock from Buy to Hold. Target shares fell 0.2% to $155.24 in pre-market trading.
- HC Wainwright & Co. Cut Repare Therapeutics Inc. (NASDAQ:RPTX) price target from $38 to $25. HC Wainwright & Co. Analyst Robert Burns maintained a Buy rating on the stock. Repare Therapeutics shares fell 0.6% to close at $17.00 on Wednesday.
- Morgan Stanley raised Principal Financial Group, Inc. (NASDAQ:PFG) price target from $76 to $79. Morgan Stanley analyst Nigel Dally downgraded the stock from Equal-Weight to Underweight. Principal Financial fell 1.6% to $91.47 in pre-market trading.
- Truist Securities cut Advance Auto Parts, Inc. (NYSE:AAP) price target from $228 to $147. Truist Securities analyst Scot Ciccarelli downgraded the stock from Buy to Hold. Advance Auto Parts shares fell 1.3% to $154.17 in pre-market trading.
- Credit Suisse slashed Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) price target from $20 to $14. Credit Suisse analyst Benjamin Chaiken downgraded the stock from Outperform to Underperform. Norwegian Cruise Line shares fell 5% to $16.72 in pre-market trading.
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Parks! America: Take Advantage Of Year-End Tax Loss Harvesting In This Micro-Cap Stock
Parks! America, Inc. (OTCQB:PRKA) is not your typical stock. When it comes to finding bargains in the stock market, it is oftentimes better to ‘fish in the smaller ponds’, so to speak, than to look at highly efficient and well-followed industries/sectors. Generally, the larger the market capitalization, the more attention a stock gets. Finding mispriced stocks in these large ponds becomes increasingly difficult as time goes on, which is why I love discovering new micro-cap ideas that I can add to my portfolio. Parks! America is a stock that I have been aware of for some time, and I have finally decided to start building a position in the company after a broad market sell-off this year. Taking advantage of year-end tax loss harvesting in this month of December could pay off handsomely over the long-term for patient investors.
Parks! America, despite being small, is simply a great business, with predictability and high gross margins of 88% and return-on-equity of around 21%. Gross profits and operating profits are at their highest level in the last ten years, and operating margins are also impressive at over 30%. Not only that, but revenues have doubled over a five-year period, and tripled over a ten-year period. This lends credibility to management, which is aligned with shareholders and the company has recently chosen a new CEO with years of experience in the amusement park and leisure/hospitality industry.
The fundamentals are exceptional for a micro-cap stock, and valuing the business based on common metrics such as earnings per share and EV/EBITDA leaves room for meaningful share price appreciation in the near, as well as in the long-term.
You may be asking yourself, why Parks! America, and where did you discover this obscure micro-cap stock?
I first became aware of Parks! America a couple of years ago through my research into the Focused Compounding Hedge Fund, run by Andrew Kuhn and Geoff Gannon. At this time, the stock was trading for just 14 cents a share. This was during the depths of the 2020 market crash, and at the time, I was too preoccupied with learning and adding to other holdings in my portfolio to take the stock seriously.
My familiarity of micro-caps was extremely limited back in early 2020, and I was just beginning to learn about over-the-counter stocks and incorporate cloning as part of my investment strategy. I did exactly what most market participants do when they come across Parks! America – they write it off as just another over-the-counter stock that is not worth their time.
It wasn’t until I read Andrew Kuhn’s letter to the Parks! America Board of Directors that I fully decided to clone Focused Compounding and buy shares in PRKA for myself. If you are interested in learning more about the company, I highly recommend that you read Andrew Kuhn and Geoff Gannon’s letter after this article, and see the approach and attitude taken by them. I found the content and tone of the letter to be impressive.
Recent Insider Buying
After I warmed up to the idea of cloning Focused on Compounding and investing in Parks! America for myself, the share price had skyrocketed and hit a fresh high of 88 cents per share in July of 2021. Unbeknownst to all, the stock was experiencing a ‘blow-off top’ and would soon crash back to reality. Now that the stock has sold off along with the broad market in 2022, shares are roughly 60% off of the highs, presenting a wide margin of safety for long-term investors.
Through my perusing of the OTCmarkets website, I found that just as recently as August 23rd, 2022, insiders were buying back shares of PRKA in the open market.
PRKA Insider Buying (otcmarkets.Com)
After doing more research, I found that this particular director and owner of the company had also bought shares in June of this year, as well as in April, for much higher than the current market price. This director also had made considerable buys in the open market throughout 2021, and has been aggressively purchasing shares of PRKA in the open market for years, despite owning over 22 million shares already.
In fact, multiple directors of the company have bought shares in 2022 on the recent decline, and this reinforced my belief that the shares are currently undervalued. There are countless reasons why an investor would sell stock in a given company, but only one reason that an investor would buy – they believe that the shares are undervalued, and are worth much more than the current market price.
It remains to be seen if the directors of the company are done buying shares in the open market, but now that the price has fallen nearly 20% since August 25th, the discount is even better. As we approach the end of the 2022 calendar year, further tax loss harvesting could put more pressure on the stock and create fantastic buying opportunity for long-term shareholders who wish to accumulate more shares.
Competitive Advantages, And Risks To The Business
Parks! America’ has 3 locations.
The location in Pine Mountain, Georgia is particularly lucrative compared to the Missouri park, which faces more local competition and suffers more in terms of profitability. The Georgia park is also situated in an advantageous location, with higher population density and is in much closer proximity to major cities.
The relatively newly acquired Aggieland Safari park in Texas is similar to the Georgia location, with higher population density and more room for growth in future years, not only in terms of number of customers, but also profitability metrics. The Texas park is also more competitively priced when compared to local alternatives. In my opinion, this newer Texas park is the real overlooked gem when looking at the business from a long-term perspective.
The Wild Animal Safari parks also offer a distinct competitive advantage compared to other local attractions, in the form of up-close interactions with a diverse group of exotic animals at lower price-points than most competitors. This is more apparent concerning the Aggieland Safari park, with ticket pricing data which I have referenced from a previous Seeking Alpha article on the company –
Texas, Adult ticket $25
Competitor: Natural Bridge Wildlife Ranch, Adult ticket $29
-Source: Contributor Add Value’s article, November 2021
In the past, the strategy from Parks! America has been to keep lower prices for admission, growing the customer base consistently and making more profit off of food and beverage sales, feeding packs for animals, and other higher-margin concessions. This is an increasingly smart business strategy over the long term, as the company can offer more value to consumers while not charging more for admission – strengthening the reputation of the business.
Another thing to keep in mind is the tendency for consumers to ‘trade down’ in terms of spending on entertainment during recessionary times. The company’s Wild Animal Safari parks have been compared to attractions at amusement parks such as Disneyland in the past, and with ticket prices increasing more and more due to inflation, the safari parks are a low-cost alternative to Disneyland and other attractions. This is a phenomenon that will likely become more apparent in 2023 as the impact of rising interest rates works its way through the economy. Below is a table showing ticket prices for Disneyland, and as you can see, the prices are vastly different.
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