Cabela's: No Comparison

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

How to compare Cabela’s Inc (NYSE: CAB) with any other retailer is difficult. Dick’s Sporting Goods Inc (NYSE: DKS) is a competitor. Orvis is a competitor. L.L. Bean is also a competitor. Even Tractor Supply Company (NASDAQ: TSCO) is a competitor, sort of. But after visiting the Hamburg, PA Cabela’s on a Sunday afternoon I can find no comparison to these stores. Cabela's is truly a unique shopping experience.

Apples to Orange Hunting Gear

First off, the store spans 250,000 square feet. On the top of a hill it’s visible from the highway for miles around and there are signs alerting you which exit to take at least 30 miles before you’re close. The parking lot is full of RV’s and cars with license plates from far flung Alaska, Massachusetts, Tennessee and so on. As they say it is a ‘destination’ retail store. There are the usual fast casual and fast food eateries that surround the Cabela’s like deer ticks waiting for the feast.

Then you walk in the door and as I commented to my daughter how crowded it was and raised my camera, the greeter shouted,”I can guarantee you’ll never get a shot of this place empty.” I believe it. The noise level is like the buzz at an Apple Store, not yet deafening but you know the joint is jumping. As you walk in you can see the two story native habitat diorama, unglassed and open on all sides, filled with stuffed animals actually hunted and placed in lifelike situations like the beavers looking up from their logjam, the bear trying to swipe honey from a beehive and mountain goats in the act of clambering up a precipice.

And there’s the fish pond, stocked with fish that kids can pay a quarter to feed. Aside from the general noise of excited shoppers there’s the constant duck calls from the hunting call counter and the little boys shooting off the air-pop guns, pop, pop, pop nonstop.

There is also the aroma of food from the cafeteria which features delicacies like elkburger, and lunch meat like smoked bison,wild boar and smoked elk for sandwiches and wraps from the deli. I so wanted to try an elkburger but the line was too long. Daughter and I had to settle for samples from the fudge shop which smells of cinnamon and candy.

Next to that there is a Shooting Gallery, like a shooting arcade for kids, and there are three large Nintendo WII screens where kids can play Cabela’s hunting video games located in the toy section. Daughter and I could have taken a class in cross-bow hunting tactics had we gotten there a little sooner or heard the Youth Wild Bird Callers perform at 10 am.

Like I said the only comparison is an Apple Store for this kind of buzz and action. The quietest place is at the tables outside the Gun Library where about 30 people were filling out their gun papers. The Gun Library is hushed with dark wood like a very high end jewelry shop except the staff are friendly and like to tell stories about the guns, especially the antiques. There was a $26,000 rifle or you could get a pistol for under $1,000. Lines were long at checkout but brisk and there was much to see even though I am not a hunting or fishing enthusiast. There was even an art gallery of sporting and wildlife art and a small home furnishings department. The Gift Lodge was also buzzing.

Camping, not Computers

What I don’t understand is how analysts and financial journalists are not writing more about Cabela’s. Maybe they aren’t into huntin’, shootin’ and fishin’. But they are missing the sheer spectacle of the place and the allure it has for families. I have seen very few articles about the actual retail experience and I don’t think it’s common knowledge the kind of retail coup that Cabela’s has pulled off. While Apple has become the most valuable company on earth Cabela’s is the kind of store Steve Jobs would have designed if he’d gotten into camping instead of computers. There is a camo iPad and iPhone sleeve available, though.

The catalogs are amazing, too and offer a mobile version you can scan with a smart phone. Cabela’s is not behind the curve when it comes to online or mobile. What they don’t know about retail or the outdoors isn’t worth knowing. Corporate governance risk is low on all counts.

That the Nebraska based company has done well this year has been credited to a resurgence in the gun trade but I saw that its Cabela’s, the store, not only guns when I actually visited and was just as impressed as the first time I shopped in an Apple store.

The stock has run big. Does that really make them less valuable a stock on valuation when they are making money hand over fist indefinitely? If you are thinking of investing please go to a store, there are 38 in the US and Canada with another five or so opening in 2013. Don’t think I am writing a commercial for Cabela’s but I was so unprepared for the store by what I had read in financial news. I don’t want you to underestimate the stores, either.

Now Cabela’s is planning three new store openings in the Mid-Atlantic including Christiana DE, Philadelphia PA and Bristol Va. but these will be considerably smaller stores. No matter, because the catalogs and online are just as easy and informative to shop for the Cabela’s bricks and mortar deprived.

Hunting for Upside

You can buy some of the same supplies at Tractor Supply Company or Dicks's Sporting Goods, but it's like the difference between watching a year old movie on DVD on a 30 inch screen at home and watching a blockbuster IMAX premiere in a crowded theater, the experience is so much a part of the purchase. Cabela's has a 20.33 P/E and only a $3.29 billion market cap. The stock has more than doubled in 52 weeks from $19.12 to $48.23. Dick's Sporting Goods has a higher P/E at 23.81 and a 1.00% yield. Tractor Supply Company has an even higher P/E at 26.96 and a .80% yield. Cabela's may not have a yield, but as word gets out about this name the upside will make up for it.

While stocks like Apple and Google are in the financial headlines every single day you can stealthily bag a trophy with Cabela’s as big city analysts ignore the phenomenon. I mean, what does JPMorgan know about making elk jerky? Cabela’s reports October 22 and any pullback in the next few weeks may be a good entry point. Good hunting!


leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Dick's Sporting Goods and Tractor Supply Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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