From: dow@everclear.berkeley.edu (Dow Research Account)
Newsgroups: misc.invest
Subject: Re: Price Co. (OTC-PCLB) - Speculative Buy
Date: 25 Jan 1993 09:01:39 GMT
Organization: University of California, Berkeley
Distribution: world
NNTP-Posting-Host: everclear.berkeley.edu

! Price Co. (OTC-PCLB) - Speculative Buy
!
! Business - Operates the Price Club cash and carry membership wholesale
!	   outlets selling basic goods to businesses, selected retail
!	   customers.  Has 94 outlets in U.S., 17 in Canada.
!
! We recommend purchase of shares of Price Co. (PCLB) for aggressive accounts.
! Recently there has been rumors circulating in the market about a possible
! buyout of the company.
! 
! According to analysts at Montgomery Securities and Alex Brown & Sons, 
! likely suitors are Wal-Mart Stores, Inc. (NYSE-WMT) and Kmart Corp. (NYSE-KM).
! The rumored takeout price of Price Co. is about $70 a share - which wouldn't
! be out of the question for the company.
!
! We did a study comparing Price Co. to Costco Wholesale Corp. (OTC-COST)
! and concluded that a $70 buyout price is extremely reasonable.  Here are 
! the results of the study:
!
!			Price Co. (PCLB)	Costco Wholesale Corp. (COST)
! Stock price (1/21/93)	$ 37 1/2		$ 24 3/4
! No. of warehouses	94			89
! Market capitalization	$1.9B			$2.8B
! Revenues (fiscal '92)	$7.3B			$6.5B
! Net (fiscal '92)	$129M			$113M
! P/E ratio		14.7			25.3
! P/B ratio		2.2			3.5
! Price/revenues ratio	0.25			0.42
! Return on equity	16.2%			14.0%
!
! From the study, we concluded that if Price Co. were to be given the same
! valuation as Costco, it's stock price should be above $70 per share.  
! And given the name recognition of Price Club, the company's stock should 
! be given a higher valuation despite Costco's higher growth rates.
! 
! And lastly, we've concluded that for geographic reasons, it is not surprising
! that Wal-Mart might be interested in buying Price Co.  A buyout of Price Co. 
! might be attractive to Wal-Mart because it would position Wal-Mart in some 
! major West Coast markets.  Price Co. has a dominant market position in 
! California and some East Coast markets.  Meanwhile, Wal-Mart's 243 Sam's 
! Wholesale Clubs operates mainly in the Southeast and Southwest.  In the
! membership warehouse business, it isn't inordinately difficult to integrate
! an acquisition.  Furthermore, with a market capitalization of almost $70
! billion, it would not be very difficult for Wal-Mart to absorb the
! acquisition of Price Co. with a stock swap.

We've received quite a number of responses in regards to what we do and
how one can be on the mailing list after posting the above item.

We are merely a non-profit group that researches the equity market and 
occasionally posts recommendations and useful information.  We do not 
maintain a mailing list.  

As for the above item, it shouldn't be news to anyone who follows the 
financial market closely.  (Dan Dorfman of USA Today just very recently 
had a column about the possible buyout of Price Co. and analysts at various 
brokerage firms have mentioned about this possible buyout in the Wall 
Street Journal and other financial newspapers and magazines.)  We've posted 
this item at this time because of its close proximity to the Price Co. 
analysts meeting to be held this Friday (1/29/93) in San Diego, which
might be a good time for any announcements in regards to a buyout or
merger.

However, we just like to point out that the key word in the above article
is "speculative".  This recommendation is merely based on rumors floating 
around Wall Street about the possible buyout of Price Co. and some financial 
analysis of the company that seems to justify this buyout.  There is no
guarantee that a buyout or merger will occur and that the stock of Price
Co. will appreciate in the near-term.




DISCLAIMER: There is no guarantee that the information on which this article
            was based is correct.  There is no guarantee that the information
            in this article is correct.  Also, the companies where we work
            have nothing whatsoever to do with this newsletter.
            Any opinion expressed here are statements of our judgement as of
            the date of issue and are subject to change without notice.
Newsgroups: misc.invest
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