This article originally ran on January 29, but must be circulating again in March because we’re getting questions from readers — so we re-share it with you today.

In case you’re wondering, this “value” stock is now about 25% lower than it was when this article first hit our pages (and the ad first hit my inbox), thanks to low comparable store sales and a weak forecast from the company when they released earnings a couple weeks ago. So… if you thought it was a value at $63, you might be extra-enthused with it at $46. The forward PE is now down just a whisker below 10. I haven’t looked at the latest financials or the quarterly update in any detail.

So, without further ado, our article and comments from back in January:

–from 1/29/18–

I don’t think I’ve covered a Hilary Kramer pitch recently, the last one that really got the attention of Gumshoe readers was her endless promotion of GW Pharmaceuticals (GWPH) as the “Microsoft of Medical Marijuana”… but now she’s out with some ads touting value stocks and her newer advisory called Value Authority, which I’ve never seen advertised before, so we’re going to jump on that and see what we can find.

(She does, incidentally, still like GWPH.)

So what is this “Number 1 Value stock for 2018” that she’s trumpeting now? One of the great benefits of having multiple newsletters with different focus is that you get to be right almost no matter what, so we should take with some bit of skepticism her big picture prognostications (as, of course, you should be skeptical of mine) — but, prepared to be skeptical, this is what she says:

“… let me explain why 2018 will be a great year for our value stocks.

“With the stock market at all-time highs, stocks have rarely been this expensive. According to Goldman Sachs, stocks have been more expensive only 11% of the time over the past 40 years.

“It’s no wonder.

“In just 12 months the Dow has jumped from 19,827 to over 26,000—the fastest rise on record!

“With unemployment at just 4.2%, inflation virtually nonexistent, and the U.S. tax cuts about to put billions of dollars back into American wallets and corporate coffers, the market has even more room to grow, too.

“But the big money won’t be made in growth stocks; instead, it will be in a number of select value plays.”

“Value” and “Growth” are overused terms that don’t necessarily mean anything — but in common investor parlance we usually think of value stocks as being companies that are valued primarily based on their actual assets and current earnings power, and often trading at below-average valuations based on those numbers — and of growth stocks as being companies that are valued primarily based on how much growth investors see in their future, how much we anticipate those earnings growing in the next few years, while they trade at a premium valuation to the market based on their current earnings or assets.

There’s no hard and fast rule about what “value” means, and you could easily come up with a few stocks that the value and growth camps both claim as their own, but, well, we’re human beings and we like to categorize things and take sides, so step up, place your bets! Who’s gonna win, value or growth?!

But anyway, what we’re interested in is Kramer’s pitch about her favorite value stock… which, we’re told, is trading at a super-cheap valuation and also growing like crazy. Here are the clues we get:

“Why My No. 1 Value Stock Could Triple Weight Watchers’ 389% Gains Last Year

“Just like Weight Watchers, this company is also riding the wave of unstoppable earnings growth.

“But unlike Weight Watchers, which profits in the diet sector, this company is making money hand over fist in the discount retail sector.

“This is why the world’s biggest institutional investors have been adding it to their holdings—and for one good reason.

“The retail apocalypse has been very, very good for it.”

She goes on to note that discounters are not suffering to the same extent as department stores when it comes to the “retail apocalypse”, and that’s generally true… the dollar stores and convenience stores and even fashion discounters have been leading the charge when it comes to store openings and excitement in retail, even as the far larger JC Penneys and Sears stores get shuttered.

So that makes it easier to get space, presumably — more clues:

“… the company opened 140 stores last year while moving its poorer performers to better locations….

“… the stock is zooming past all of the indexes—up 22% in the past six months—not only beating the indexes by as much as 70% but also beating the FANG stocks (Facebook, Apple, Netflix, and Google) by as much as 100%!”

Those are relative numbers, which we should always be careful of — all she’s saying is that this stock has gone up twice as fast as at least one of the FANG stocks over the past six months. The weakest FANG stock has been Facebook of late, so that just means that this stock has gone up by more than twice FB’s 9% return over the past six months. 22% is not bad performance for six months, but there are a lot of stocks that have done “70% better” than any given index over that particular time period (and yes, this “secret” stock is now up about 26% over the past six months, which is about 70% higher than the S&P’s 15% return over that time period).

But anyway, who is this bugger? Any other clues? She tells usa bout the earnings growth and the PE, which sound impressive:

“With 217% earnings growth and a 12 P/E, this is one stock that’s set to soar”

And we get lots of hints about the top institutional owners, which doesn’t usually mean anything (almost all stocks are dominated, in their ownership lists, by indexers like Blackrock and Vanguard, so we shouldn’t usually assume that those institutional investors are making qualitative assessments of this specific company), but it does help us to confirm the Thinkolator’s results… so as we note that Blackrock reportedly owns 12.23% of this company, and Vanguard 11.57%, we can confirm that yes, this “secret” stock is Big Lots (BIG).

Big Lots is a discount retailer, with relatively large stores compared to discounters like Dollar Tree or Dollar General, perhaps because they focus on housewares (furniture takes up more room than toothbrushes and toys). Our local Big Lots is next to our Local Wal-Mart, and the two are roughly equally depressing to visit (dingy, confusing, low quality junk, friendly but inadequate staff, etc), but that doesn’t mean much — it’s a dingy time of year here in the northern tundra of New England, none of us are looking our best at the moment.

Big Lots has actually been on a decline lately when it comes to store count, so presumably they overbuilt and had to pull back a bit… the past several years have all seen net reductions in store count, so Big Lots is now back to 1,430 stores as of the September quarter, the lowest number since 2011. The operating numbers have also generally trended downward or been stagnant for much of the past six years, though the past year and a half or so have been on the upswing, and the reduction in share count has helped the stock and the per-share numbers.

The 200% growth numbers shouldn’t cloud your mind too much, but analysts do see earnings growth coming — and with a relatively decent valuation, that might be enough. They are cheaper than the most similar peers like Dollar Tree and Dollar General, though they’re also performing a bit worse when it comes to growth on a per-store basis. They should also be a significant beneficiary of the federal tax cuts, since they pay a high tax rate (about 36% over the past four quarters), so that could help considerably and boost earnings by as much as 30-40% if they get the full benefit of the tax cut (they probably won’t, there are lots of other numbers that go into that — but analysts have been raising estimates for next year). And, perhaps as important as anything else, they’ve been beating analyst estimates — though since this is a retailer, their next quarter (ending on Wednesday, will be reported in early March) will be the key because that holiday period represents well over half of their annual sales and earnings.

Right now, BIG trades at a trailing PE of about 16 and a forward PE of 13, with a $1/share annual dividend that provides a yield of about 1.5% (and they have been growing the dividend, which is a good sign, so dividends and buybacks may be the meat of shareholder returns if they don’t accelerate their top line somehow). Analysts are expecting 16% earnings growth for the next five years, on average, but we should probably take that with a bit of skepticism, if only because the company has had an average drop in earnings of about 17% over the past five years. If you want to buy this one, make sure you get to know their strategy and their focus and get comfortable with the plan, because they are going through some strategic changes, it appears, in a very competitive market, and it might be a bumpy ride –so you could easily get bumped off if you aren’t sure why you were on the ride in the first place. If the analysts are right, then paying 13X forward earnings for a company growing earnings in the mid-teens is certainly a “value” stock by most metrics, and a pretty easy one to argue in favor of — assuming you have some confidence in that growth and in their business plan.

You can see their latest conference call transcript here, if you’re curious, and the press release here. The company is in the midst of refocusing its strategy a bit, including opening its “store of the future” that focuses more on some higher margin and more “winnable” businesses. The CEO also went on medical leave last month following a hospitalization, so I have no idea whether or not that will end up being a big deal (usually it isn’t, in my experience).

I haven’t seen any confirmation that they opened 140 stores last year, though that’s possible (though they’ve not opened that many in a single year in the past decade… they opened 9 in 2016, but also closed 26… so the net store count still dropped, and as of the third quarter the reported footprint of 1,430 stores was two stores lower than at the end of 2016). It is a company that already has a national presence, including several regional distribution centers that cover much of the country pretty well, so there’s no reason they can’t open more stores if they see opportunity — their store count is pretty similar to a company like TJ Maxx, but is far, far lower than the deeper discounters like Family Dollar or Dollar Tree, which are a bit smaller but have 5-10X more locations than Big Lots.

And that’s all I know about Big Lots. Think it’s a value? Think it’s a dud? Feel free to chime in with your own thoughts with a comment below.