Jamba Juice is well-known in the U.S. for its healthy, refreshing fruit drinks. Its stock has reached extremely oversold and undervalued territory. JMBA has been heavily shorted and manipulated in recent months. What stands out in particular is its recent share price of $4.80 that is now well below its book value per share of $5.84.
Definition of book value per share:
A company's common stock equity as it appears on a balance sheet, equal to total
assets minus liabilities, preferred stock, and intangible assets such as goodwill.
This is how much the company would have left over in assets if it went out of
business immediately. Since companies are usually expected to grow and generate
more profits in the future, market capitalization is higher than book value for
most companies.
Having lived in California almost all of my life and being well aware of the strong
following for this well-loved brand, I find it hard to believe that this stock is
now trading like it is going out of business. In fact, its book value per share
indicates that if it did go out of business, its total remaining value would still
exceed its currently traded market value.
High institutional ownership of 88% leaves a very tiny float that has been heavily
shorted. Any positive news or surprises could cause a dramatic short squeeze. In
addition, short interest has been decreasing steadily in recent weeks and months
which is a bullish sign.
Jamba now has a very strong experienced management team and has announced solid
plans for revenue growth and nationwide expansion. For a company with such a solid
base and good future prospects, i think $5/share makes for a great investment for short or long term horizons.
Why ? any of the following reasons: upcoming short squeeze, takeover target, fundamental values.
$4.92 (11/10/07)
