Making Deals and Breaking Deals: CMRG, HELE, LEI

Trends, Observations, and Exclusive Opinion

Three SmallCaps on the Buy-Side  

CMRG: A Very Smart Move for Retailer to Enter New Turf  

HELE: Q2 Numbers Out Tomorrow before the Market Opens

LEI: Co Cancels March Agreement to sell 4 Million Shares

First up this morning we have Casual Male Retail Group Inc., (CMRG) http://www.casualmalexl.com/  currently trading in the $4.19 range. CMRG has a 52-week high of $4.49 set on 04-26-10 with current trailing twelve month revenues of $391+ million and a positive ttm diluted EPS of +$0.25. I like those earnings. CMRG operates as a specialty retailer of men’s apparel in the United States, Canada, and Europe. CMRG operates its stores under the Casual Male XL, Casual Male XL Outlets, Rochester Clothing, B & T Factory Direct, Shoes XL, and Living XL trade names. As of January 30, 2010, CMRG operated 395 Casual Male XL retail stores, 65 Casual Male XL outlet stores, and 19 Rochester Clothing stores. I like this move; Bon-Ton stores (NYSE: BONT) will provide CMRG’s men’s big and tall apparel through Bon-Ton’s website and, beginning in spring 2011, certain Bon-Ton stores. Smart. BONT operates 277 department stores in 23 states. Even within 30 cents of its high, CMRG is a short-term (6 Mo) ‘Buy’ consideration for me.

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Next up this morning we have Helen of Troy Limited (HELE) http://www.hotus.com/ currently trading in the $26.49 range. HELE has a 52-week high of $28.98 set on 04-26-10 with current trailing twelve month revenues of $663+ million and a positive ttm diluted EPS of +$2.43. I really like those earnings. HELE makes and sells a portfolio of brand-name household and personal care consumer products. The HELE diversification of products is immense. From kitchen tools to beauty care HELE products are household names in the U.S. HELE products are also sold under licensed trademarks including Vidal Sassoon, licensed from The Procter & Gamble Company, Revlon, licensed from Revlon Consumer Products Corporation, and Dr. Scholl's, licensed from Schering-Plough HealthCare Products. Go to the HELE site and better take along a lunch as there are so many products to look at. As for numbers, in July HELE posted a nearly 27% jump in Q1 net income as sales rose 11.3%. HELE earned $18.4 million, or 59 cents a share, in the three-month period ended May 31. In the same period last year, the company earned $14.5 million, or 47 cents a share. Revenue rose to $160.2 million from $143.9 million in the quarter. At $2.50 off its high, HELE would be a ‘Buy on the Dips’ consideration for me. HELE will release second quarter financial results prior to the opening of trading on Wednesday, October 6, 2010.

Finally this morning we have Lucas Energy Inc., (LEI) http://www.lucasenergy.com/ currently trading in the $2.12 range. LEI has a 52-week high of $3.39 set on 06-21-10 with current trailing twelve month revenues of $1+ million. LEI is an independent oil and gas company in Texas. LEI has interests in approximately 12,500 gross acres of oil and gas leases in South Texas. LEI operates 30 producing wells. Last week LEI announced that its joint venture operating partner, Hilcorp Energy Company, has permitted the Hagen EF No.1H well in Gonzales County, Texas. LEI has a 15% carried (no capital cost to Lucas) working interest in this first well which is planned to be spudded by November 1, 2010. The permit is for a 4,500 foot lateral in the Eagle Ford formation. William A. Sawyer, President and CEO of LEI said, "The day has arrived that we are moving toward Eagle Ford production which should make a significant increase in the Company's production." A week earlier, LEI posted a Termination of a Material Definitive Agreement entered into on March 26 with WR Hambrecht under which the Company could sell up to 4,000,000 shares of common stock from time to time in an at-the-market public equity offering program. That’s not going to happen. LEI at half its 52-week high would be a ‘Buy on the Dips’ consideration for me.