SVLF – Sell Recommendation

By: ispeculatornew
Date posted: 05.13.2007 (12:00 am) | Write a Comment  (0 Comments)

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SVLF – Silverleaf Resorts (Nasdaq) (Closing Price on Friday 05/11/07 – $4.97)

There have been a few developments since my initial recommendation of Silverleaf Resorts.

In February Silverleaf Resorts moved from the American Stock Exchange to the NASDAQ. This was a positive move since the NASDAQ is a higher profile stock exchange and Silverleaf will get more exposure there. In conjuction with the move Silverleaf changed its symbol from SVL to SVLF.

Silverleaf has also released two earnings reports. In March they reported fourth quarter results and more recently they reported first quarter results on May 8. 

For the first quarter of 07 Silverleaf announced revenue of 58.83 million and earnings per diluted share of 0.17. They also reaffirmed their guidance for 2007 net income of approximately $25.5 million. If they make their guidance it will be an increase of around 11% over net income in 2006.

Earnings growth of 11% is decent but not great and I think barring an upward revision to earnings SVLF won’t see a major move up in share price. I think Silverleaf may still increase another ten to twenty percent by the end of the year but I think it is trading close to its fair value.

Silverleaf Resorts has produced a decent gain since I originally recommended it and I still like the stock. However, I think there are other stocks that have the potential to produce a better return and I am going to end my coverage of this stock and book a gain of 18%.

Disclosure: I currently have no position in SVLF.

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