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March 29, 2006 Stock Pick: Shoe Pavilion, Inc. (SHOE)

Stock Price: $8.53

Shoe Pavilion is an independent off-price branded footwear retailer in the Western United States. It offers a broad selection of women's, men's and children's designer label and branded footwear, typically at 20% to 60% below department store regular prices.

SHOE just announced its pricing of a secondary public offering of 3 million shares at $7.20. The underwriter would not have purchased shares at $7.20 unless they thought their was little to no chance that the stock would drop. Proceeds from the offering will go towards opening new stores and additional working capital.

SHOE is safe at current levels and becoming recognized by Wall Street especially after dropping from its 52-week high of $11.00 set on February 1st. SHOE is sitting at a market cap of only $58.06 million with expected first quarter revenue of $26 - $28 million with earnings of 2 cents to 6 cents a share.

We are confident Shoe Pavilion will start expanding rapidly and report strong growth in 2006 over 2005. Same store sales were up 5.5% for the fourth quarter. The company is looking to acheive $100 million in sales this year. We think they will exceed this number.

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