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April 1, 2010

Head for the Border?

Borders Books may Outperform Broader Market over Next 12 Months
ValuEngine has issued a BUY recommendation for BORDERS GROUP (BGP). Based
on the information we have gathered and our resulting research, we feel that BORDERS
GROUP has the probability to OUTPERFORM average market performance for the next year.
The company exhibits ATTRACTIVE price/sales ratio, market valuation and expected EPS
growth.
While the models have been optimistic about BGP in terms of valuation and forecast
for some time now, qualitatively there was uncertainty about the company. The firm had some
short-term outstanding loans that exceeded the amount of cash held.
However, according to Marketwatch the company paid off one large loan and "closed
on a new $90 million term credit facility and entered a new $700 million asset-based credit
facility." In addition, Q4 profits for the company almost doubled year-over-year (from $
0.49/share to $0.91/share.) The stock jumped hard on the news and gained almost 44%
yesterday. Our models still find it very undervalued and see good short and long-term forecast
figures for the ticker.

Subscribers can check out the latest figures on BGP HERE.

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MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 43.69%
Stocks Overvalued 56.31%
Stocks Undervalued by 20% 20.82%
Stocks Overvalued by 20% 26.65%

SECTOR OVERVIEW

Last 12- P/E

Sector Change MTD YTD Valuation
MReturn Ratio
Basic Industries 0.04% 7.27% 10.01% 12.92% overvalued 98.96% 27.92
Capital Goods -0.32% 7.77% 10.15% 12.75% overvalued 78.70% 22.97
Consumer Durables -0.03% 4.10% 6.38% 15.31% overvalued 96.98% 24.44
Consumer Non-Durables -0.47% 5.74% 6.66% 4.20% overvalued 85.37% 20.37
Consumer Services -0.53% 8.03% 10.65% 5.56% overvalued 86.23% 22.61
Energy 0.29% 2.72% 0.17% 9.77% overvalued 87.04% 21.2
Finance -0.25% 5.22% 8.47% 7.99% overvalued 51.27% 19.18
Health Care -0.75% 5.83% 7.57% 0.75% overvalued 68.92% 22.13
Public Utilities -0.45% 3.90% 0.23% 4.38% overvalued 48.61% 17.54
Technology 0.00% 5.15% 8.05% 1.02% undervalued 82.10% 28.25
Transportation -0.48% 5.28% 7.16% 6.54% overvalued 80.99% 23.26