Caleres (CAL), mcap=$895m, price $25.12 vs $21.60

CAL pitch:
– Diversified footwear retailer at 5x PE.
– Owns the Famous Footwear brand of stores (870 stores).
– Equity is materially mispriced and generates significant free cash flow.
– Q4 results are expected to be nicely above guidance as a normal seasonal pattern recovers into Christmas.
– Set to fully repay its debt over the next 18 months.
– Has repurchased 7% of shares over the last 3 quarters and has large remaining repo authorization.

CAL valuation:
– Significant upside if CAL trades up to the mean of non-growth shoe retailers.
– At PE of 7x-8x 2023, would be $40 stock.

Exp. gain: +85% to $40/share.

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