Outdoor retailer Cabela’s Inc. (CAB) is one of my favorite stores, and I’m not the only one. As of the end of 2012, the Nebraska-based retailer of hunting, fishing, camping and outdoor gear—including supplies for shooting sports—had 40 retail units across the country. I don’t happen to live close to a Cabela’s retail store, but that doesn’t stop me from buying directly from their website.
Loyal and frequent customers of Cabela’s helped the company post impressive revenues of $3.1 billion in 2012, a gain of 11% from the prior year. This year, the consensus forecast for revenue is north of $3.6 billion, or about a 17% jump from the current year forecast.
While that’s pretty strong growth, the company isn’t satisfied yet. In fact, it has its sights set on even greater growth via the expansion of its current store presence in the U.S. and Canada. The company has plans to open fourteen new stores this year, including their latest announcement of stores in Cheektowaga, N.Y., Lubbock, Texas, and Berlin, Mass.
Click to Enlarge“We think over time there is an opportunity to grow to 150 to 200 stores,” Credit Suisse analyst Seth Sigman told Investor’s Business Daily, adding, “Obviously, that would increase merchandise sales significantly.”
The good thing about Cabela’s expansion plans is the company intends to open stores that are smaller than their current large-scale legacy stores. These are what they call their “new-generation” stores, which includes even smaller retail outlets they call “Outposts.”
According to CEO Tommy Millner, these smaller stores perform 30% to 40% better than large legacy stores in terms of sales and profit per square foot. That’s a key metric for retailers, and it’s one that could keep CAB shares climbing for months to come.
Through the first half of 2013, CAB shares are up 54%, and that includes as recent late-May selloff along with the rest of the market. CAB shares now have pulled back to support at the 50-day moving average. If this current support level holds, we could be looking at another leg up for the retailer—and that means a position here could net you a nice 10%-15% trading profit throughout the summer months.
At the time of publication, Jim Woods did not hold a position in any of the stocks mentioned here.