Steve Madden (SHOO) may not be all that bad

Steven Madden, Ltd. (Public, NASDAQ:SHOO) shares are up 25% in the last week and there appears to be more to gain.  Now that they are out of their 52-week low funk and trading at $22, momentum is catching fire and traders are all over it.

Fellow contributor to WallStNewsletters.com - The Full Monte, Mr. James Cullen from CollegeAnalysts.com had this to say about SHOO on 10/17/2007 (just before the big jump occurred):

The last two months or so I’ve been looking into a number of retailers, because I feel that there is far too much pessimism surrounding many of the stocks - even in the stocks of well-financed companies with strong brand names like Steve Madden, American Eagle (AEO), and Aeropostale (ARO). Wal-Mart (WMT) was even been sold off on the misguided belief that Americans are going to stop shopping. One good indicator to look for in excessively oversold issues is that the stocks will move up on bad news. Today, Madden announced that they will be negatively impacted by a “more challenging than expected sales environment,” and the company cut guidance to well below current analyst estimates; SHOO responded by climbing 7%. Does that necessarily make sense? No. But taken in the context that this $400M company has $100M in net cash and trades for 7x net income and 3.75x EBITDA, people are obviously little in the way of performance from Steve Madden, and that makes it a perfect setup ripe for future outperformance.

SHOO shares are up after reports that third parties have expressed interest in purchasing the NY-based shoe maker.  The next big question becomes what is the buyout price? Shareholders were urging that the Company explore alternatives to enhance shareholder value and it appears they got their wish. You can't blame the shareholders for the revolt; SHOO stock has fallen 46% in the last year. Even if an offer doesn't happen, the fundamentals are looking good on SHOO and this could be a decent entry point.

Come next week if SHOO gets a buyout offer, expect to get another few points out the stock and cash out before the selloff occurs.  Could be easy money fellow Masters, you make the call.

Contributor at TheStockMasters.com

Our Original newsletter that has enlightened our subscribers for over a year. It contains What to Buy, What to Sell, and Market Commentary. We have a 17.5% return since October 2006 and the average wait for a return is only 3.61 months and we have the track record to prove it (click here to view Master Picks track record). We've had great feedback, and in turn have already created a unique following of thousands of Stockmasters. Our asking price is only $45 for a 12 month subscription.