Why West Marine Inc. Stock Surged 33% Today
Boating supplies retailer West Marine Inc. (NASDAQ: WMAR) shares are up an astounding 33% Friday as of 1:10 p.m. EDT.
It's no secret why. Friday morning, West Marine announced it has agreed to sell itself to private equity firm Monomoy Capital Partners for $12.97 per share, cash. West Marine says the buyout price totals $338 million in "total equity value," and points out that this gives its shareholders a 32% premium to the stock's "30-day average performance."
With West Marine stock now selling for $12.84, it's within pennies of the announced buyout price. With no other potential buyers on the horizon (that we know of), it's unlikely to go up any more.
That said, if you buy West Marine stock now, and you can expect to make a $0.15 profit, per share bought, by the time the deal closes. Management says it's hoping to close before the end of the third quarter of this year.
That would work out to a maximum of three months' waiting, for a profit worth 1.17% of the current share price -- a potential return of about 4.7% annualized. (If the deal closes sooner -- say, one month from now -- that annualized profit triples to something closer to 14%).
Those look like decent profits to me, and with little chance of antimonopoly concerns derailing this sale, I'd say that, unless you have a better stock idea, which you think will produce larger returns within the next one to three months, shares of West Marine look like a decent place to place some money in the very short term. Even after rising 33% in a day, I actually see a little bit more profit to be made here.
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Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.