Originally written November 2008, before the private equity buyout Silver Leaf Resorts is another timeshare and potential baby boomer stock like ILX that I mentioned in yesterdays article. Silver Leaf grew revenue in the first quarter this year at a little over 30% and diluted net income per share came in at $.17 a share vs. $.16. They grew shareholder equity 4% year over year. Earnings have been growing a little better than ILX over the past few years.

They have a bit of long term debt with notes payable and capital lease obligations of $276.765 mil. They have 6% $3.796 mil notes due this year,10.5% notes due in 2008 of $2.146 mil and $24.6 mil at 8% in 2010. They have a healthy current ratio of 1.44.

The stock has been in full bull mode and they haven't hesitated in issuing stock options and buying back shares because of it. This I don't like. They have been issuing shares which are currently at about $37 million from $11 million in 97'. Management has done a pretty good job over the last three years growing net margins, shareholder equity and earnings. The stock is up over 400% since early 2004.

The stock is currently trading for about $6.45 a share and has a trailing PE multiple of about 11 and a forward multiple of 9. It is trading for about 1.5 times book value. The valuations look compelling and the industry demand good. Baby boomers are retiring and not looking to spend money outside of the US with the weak dollar. In an interview on theStreet.com the CEO said they are in close driving distance with customers and gas prices aren't a big factor in the business.



disclosure: no position in Silverleaf Resorts, Inc.(SVLF)

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