This Stock has More Cash than its Market Cap, and NO Long-Term Debt
I will be surprised if the management does not buy out the company in the near future and in the process make its investors very very rich.
If you find a penny lying on the street, will you pick it up? What if you find a $100 note?
The company we are talking about today has about $30 million available to be picked up for free by astute value investors.
Consider the following
The company has $66 million in cash and short-term investments on the books
Including inventory and accounts receivables, its total current assets are $96 million
Its Total Liabilities is $22 million. If you are keeping score, you can liquidate current assets, pay off all liabilities, and have $96 - $22 = $74 million left over.
All of the liabilities are short-term - there is no long-term debt and they have not needed to borrow long-term in the past 10 years of history.
The market cap of the company is $43 million as of today.
This means, if you close the company down today and pay off everyone you owe, you will be left with $74 million. Will you pay $43 million to get $74 million in return?
Oh, before we forget - they also have about $24 million in Property, Plant, and Equipment that we have not counted. These take longer to convert to cash and may lose some value in the process, but should be sufficient for you to pay all your advisors in this deal.
The stock trades at a P/E ratio of 4.2 and P/B ratio of 0.4
And last but not least, the company is not only profitable but also growing. The company has grown its revenue at 6.1% CAGR in the last 10 years. It has grown its EPS at 13% CAGR in the last 10 years. Its Net Profit Margin is at 15.5%. And it pays a dividend yielding 7.6% per year with a payout ratio of 30.8%, and a 5-year average dividend growth rate of 7.4%/year.
These are the types of opportunities that would make Ben Graham salivate.
Let me reveal the stock below and take you through the business in some detail. I will tell you how much to buy, what to pay, and when to sell so you know how much profit you will make from this investment.