Cheap Chic Retail Stocks Under $5:The Talented Blonde, Kristin Bentz, tells investors how to capitalize on downtrodden consumer retail stocks.


Click here to watch the video.

Q: Does anyone in particular come to mind?

A: Exstein: Clearly, a company like Bon-Ton Stores (BONT), which made a major acquisition two years ago and financed it all with debt, is now suffering with a very leveraged balance sheet. A leveraged buyout that has gone sour is Mervyn's, a department-store chain. What you are now seeing, particularly with the old-line department stores, is about survival and thinking about the balance sheet first and the P&L second.

Potential growth

A group of funds managed by Gamco Investors reported ownership of 741,000 shares (5.19%), after purchasing 242,500 from Feb. 11 to April 7 at $5.04 to $7.30 apiece.

With Bon-Ton's share price down to under $6 from $57 last spring, Wall Street is worried whether the York, Pa., retail chain will make it. Bon-Ton now has a market value of just $100 million, versus estimated debt of $1.2 billion at the end of January -- fourth-quarter financial results haven't been released yet. Bon-Ton bet the company on a $1 billion debt-financed purchase in 2006 of Carson Pirie Scott and other chains from Saks, and that deal looks like a loser. The bad news is that Bon-Ton's same-store sales have been weak, including an 11% drop in December. Bon-Ton earned nearly $3 a share in 2006, but it may have operated close to breakeven last year. The good news is that cash flow is comfortably above interest payments and Bon-Ton isn't burning cash. Assuming vendors continue to allow Bon-Ton to finance its inventories, there appear to be no near-term risks to its survival. Given a sizable base of short sellers, Bon-Ton stock could rally on any hint of good news. Safer choice: J.C. Penney.

If you have a huge contrarian bend and you’re bullish the consumer, look at Bon-Ton (BONT) says Karen Finerman. However, personally, I'm not bullish the consumer.

0.67

From Barron's 7-2-07:

"Another pick, Bon-Ton Stores, a department-store chain that he still favors, has nearly tripled. An orthodox stockpicker, Siris is not."

383,000 shares purchased by insiders, 2 buyers

.42%

loss