Sunday, March 22

Good Company at a Cheap Price, Micro Cap


Computer Task Group Inc (CTG): “Computer Task Group Inc is an IT solutions and staffing services company with operations in North America and Europe. The Company's services include IT Solutions and IT other Staffing.” Morningstar

IT solutions include planning, developing, implementing, and managing technology requirements. Staffing service involve the recruitment, and management of IT talent. CTG also supports organizations that need flexible IT staff . The company’s market focus includes Healthcare, Technology Service Providers, Financial Services and Energy.

CTG is cheap as measured by their earning yield , EV/EBIT = 5.77. Its a good company with a consistent high ROIC. Current ROIC is 17.30%. The ROIC can be higher or lower depending how you calculate invested capital.
Note the financial statistics below highlighting the historical low valuations and market size.  Enterprise value to tangible book, revenue, EBIT or GP are all at historical lows. Further a solid financial position is demonstrated by the Z score, zero debt, positive cash flow and 3.25% TTM dividend yield. CTG is oversold and cheap.







 
























Value institutions have maintained or increased their positions.  See below; Royce, Heartland,Robeco,TETON Westwood Mighty Mites and other respected value institutions.








 
 
 
 
 















CTG = $7.45
Market Cap: 139.67M , Enterprise Value:98.82M
Price/Book (mrq): 1.25 , Enterprise Value/Revenue (ttm): 0.25
Enterprise Value/EBITDA (ttm): 4.84

Revenue (ttm):393.27M , Qtrly Revenue Growth (yoy):-4.40%
Gross Profit (ttm):  79.34M , EBITDA (ttm):  20.43M
Total Cash (mrq): 40.86M , Total Cash Per Share (mrq): 2.18
Current Ratio (mrq):  2.57 , Book Value Per Share (mrq): 5.99
Operating Cash Flow (ttm): 6.71M ,Free Cash Flow (ttm): 7.32M
52-Week Change: -55.60%

52-Week High :17.47 , 52-Week Low : 7.27
Shares Outstanding: 18.75M  Float: 13.34M
% Held by Insiders: 32.95% , % Held by Institutions:  58.10%
Trailing Annual Dividend Yield:   3.20%








 

The stock's underperformance versus its strong valuation creates a mean reversion candidate . Below, view the stock's performance versus its industry peer group.
 
 
 
 
 
 
 

Sunday, March 15

Deep Neglect Nano Cap Value


Fuel-Tech, Inc. (FTEK): “Fuel Tech Inc is a technology company engaged in the development, commercialization and application of state-of-the-art proprietary technologies for air pollution control, process optimization, combustion efficiency and advanced engineering services.”Morningstar




Market Cap: 72.84M , Enterprise Value: 58.89M
Price/Sales (ttm):0.85, Price/Book (mrq): 0.80
Enterprise Value/Revenue (ttm): 0.70 , EV/EBITDA: 17.85
Qtrly Revenue Growth (yoy): -36.00% ,
Gross Profit (ttm): 46.82M  EBITDA (ttm):3.30M
Total Cash (mrq): 15.58M , Total Cash Per Share (mrq):    0.68
Current Ratio (mrq): 3.09 , Book Value Per Share (mrq):  3.91
Operating Cash Flow (ttm):4.86M ,Free Cash Flow (ttm):-1.00M
52-Week Change: -40.15%
52-Week High: 6.77 , 52-Week Low:  3.08
Shares Outstanding: 22.84M ,Float: 15.95M
% Held by Insiders:28.93% , % Held by Institutions: 25.80%

Short % of Float (as of Feb 27, 2015): 4.10%

Moderate positive insider activity
2014 Insider Activity
Symbol Year Month Type Title Price Paid Shares Value Shares Activity / Shares Outstanding
FTEK 2014 Dec DirectPurchase Officer 3.69 30,000 110,700 0.13%
FTEK 2014 Sep DirectPurchase Officer 4.23 60,400 255,295 0.26%
FTEK Subtotal 2014 4.05 90,400 365,995 0.40%














































 

Sunday, March 8

Institutional Negative Sentiment, Two Contrarian Thoughts


Travelzoo Inc. (TZOO): Price = $9.77

“Travelzoo Inc. is an Internet media company, which informs over 27 million subscribers, as well as millions of Web site users, about the travel and entertainment deals available from thousands of Companies.” Morningstar


Summary Thesis
The annihilated stock price creates a margin of safety with cheap strong valuation versus its industry and history. 

Down -59.16% over the past 52 weeks, Revenue growth for 10 years was 17.20%, Revenue growth for 5 years 11.70%, Book value 5 year growth was 3.60%.

Valuable website properties should entice a strategic buyer. Fly.com (a flight search engine), SuperSearch (travelzoo.com/supersearch/ for flights, hotels, vacations and car rentals. 


Founder Bartel Ralph owns 51%.




















Note the growing tangible book value per share, historically cheap EV/Revenue, current enterprise value of 89.10M versus 639.02M EV(2010),353.28M EV (2011), 253.36M EV (2011). 


Market Cap:  143.91M , Enterprise Value:  89.10M
Price/Sales (ttm): 1.04 , Price/Book (mrq):   3.71
Enterprise Value/EBITDA (ttm): 5.62
Profit Margin (ttm):  11.51% , Operating Margin (ttm): 9.48%
Return on Assets (ttm): 8.20% , Return on Equity (ttm): 45.97%
Revenue (ttm):  142.08M , Revenue Per Share (ttm):     9.62
Qtrly Revenue Growth (yoy):   -15.90%
Gross Profit (ttm):  124.17M , EBITDA (ttm):  15.87M
Total Cash (mrq): 54.81M , Total Cash Per Share (mrq):     3.72
Current Ratio (mrq):2.13 , Book Value Per Share (mrq):2.70
52-Week Change:    -59.16%
52-Week High(Mar 10, 2014):24.11 , 52-Week Low)(02/10/15): 8.45
Shares Outstanding: 14.73M , Float: 6.06M
% Held by Insiders:  52.32% , % Held by Institutions:  38.10%
Short % of Float :5.40%



Five Star Quality Care Inc. (FVE):Price = $3.56

“Five Star Quality Care Inc a healthcare and senior living provider. It is engaged in operating senior living communities, including independent living or congregate care communities, assisted living communities and skilled nursing facilities.” Morningstar

Summary Thesis
Mean reversion candidate within a demographically favorable industry, Long-Term Care Facilities.

60.22% off 5 year high, and 41.54% off 52 week high, 5 year range 2.15 to 8.95.

Price and valuation are near 2 year low.

IMPROVING valuations such as tangible book value per share, revenue per share, EV to revenue per share.

Own or lease 211 senior living communities





















Market Cap:  173.23M , Enterprise Value: 210.31M
Price/Sales (ttm):   0.16 , EV/Revenue (ttm):    0.19,  Price/Book (mrq):  0.59
Enterprise Value/EBITDA (ttm): 10.40
Revenue (ttm):  1.10B , Revenue Per Share (ttm):    22.94
Qtrly Revenue Growth (yoy):   2.80%
Gross Profit (ttm): 1.09B ,EBITDA (ttm):  20.23M
Total Cash (mrq):40.00M , Total Cash Per Share (mrq):     0.82
Total Debt (mrq):77.07M , Total Debt/Equity (mrq):  25.71
Current Ratio (mrq): 0.69 , Book Value Per Share (mrq):6.16
Operating Cash Flow (ttm): 30.32M 
52-Week Change:    -40.27%
52-Week High:6.09 , 52-Week Low: 3.23
% Held by Insiders: 17.16% , % Held by Institutions:  60.80%

Short % of Float : 1.70%

Sunday, March 1

Small Cap, Profitable, Value, Oversold, Strong Growth


“Furmanite Corp together with its subsidiaries provides technical services, including leak sealing & hot tapping under pressure, on-site machining, heat treatment, heat exchanger repair & manufacture, concrete repair, bolting, valve testing & repair.” Morningstar


Summary:
·         Small cap profitable value stock with strong growth down 40% for the prior 52 weeks. Serves a wide group of industrial sectors.

·         Worldwide revenues with 3,000 employees, ~85 locations. Financially strong with a +85 year history, founded in 1952.

·         Material insider buys from a diversified group near the  current price during end of 2014. 

·         Historically and industry cheap using EV to sales or EV to non cash asset(EV to non cash assets was 1.18 for the MRQ versus a 2013 EV/non cash assets of 2.10). Equity per share for the MRQ was 3.71 versus 2010 balance of 2.66; revenue per share increased to 13.87 for TTM versus 2011 8.48, GP per share was 3.38 for the TTM versus 2.60 for 2011.


·         Value institutions, Royce, Ariel and Gamco all increasing position for the quarter ending 12/31/14








































Market Cap:261.84M (price = $6.95), Enterprise Value: 283.94M

Price/Sales(ttm): 0.51, Price/Book (mrq):1.91

EV/Revenue (ttm): 0.54, EV/EBITDA (ttm): 9.34

Qtrly Revenue Growth (yoy): 24.70%,Gross Profit(ttm):121.25M

52-Week Change:  -40.60%

52-Week High: 12.34, 52-Week Low: 5.75

% Held by Insiders:  3.43%, % Held by Institutions:   65.60%


Image below taken from Morningstar





















Value based Ownership:


















Thursday, February 19

Insider Nano Cap Value Purchases, less than 30M in MC and EV


Click for Quotes on the Stocks Below
















Dynasil Corporation of America (DYSL)

“Dynasil Corp of America is a manufacturer of specialized instruments and products for application markets in the medical, industrial and homeland security/defense sectors.” Morningstar

Diversified group of insiders were buying at the current price during February 2015. Dynasil Corp founded in 1960 owns two real estate properties. One story masonry and steel manufacturing and office facility containing approximately 15,760 square feet in West Berlin, New Jersey. Additionally,  there is a two-story 17,000 square foot manufacturing and office facility in Kent U.K.


Total liabilities aggressively reduced from 2011 at 18.63M to the MRQ 11.99M.

Improvement in working capital management, average 2011 to 2013 versus 2014; DSO, Inventory Turnover, Cash Conversion Cycle, Asset Turnover

Tangible book value per share improvement with no correlated increased stock price.





Market:  22.43M , Enterprise Value:   27.50M
Price/Sales (ttm):  0.52 , Price/Book (mrq): 1.53
Enterprise Value/Revenue (ttm): 0.65 , Enterprise Value/EBITDA (ttm): 10.91
Return on Assets (ttm): 3.29% , Return on Equity (ttm): 16.05%
Revenue (ttm):  42.31M , Revenue Per Share (ttm):   2.75
Qtrly Revenue Growth (yoy): 1.50% , Gross Profit (ttm):   16.73M
Total Cash (mrq):   3.84M , Total Cash Per Share (mrq):     0.24
Total Debt (mrq):  7.27M , Total Debt/Equity (mrq):   50.81
Current Ratio (mrq):  1.50 , Book Value Per Share (mrq): 0.88% 
52 Week Change = -20.90%
Stock price on 02/16/15 = $1.35



ADDvantage Technologies Group(AEY)

“Addvantage Technologies Group Inc through its subsidiaries distributes and services a line of electronics and hardware for the cable television industry.” Morningstar



Market Cap (intraday): 24.67M , Enterprise Value: 23.85M
Price/Sales (ttm):0.60 , Price/Book (mrq): 0.61
EV/Revenue (ttm): 0.59 , EV/EBITDA (ttm): 7.24
Revenue (ttm): 40.61M , Revenue Per Share (ttm): 4.05
Qtrly Revenue Growth (yoy): 77.10% 
Gross Profit (ttm): 11.61M , EBITDA (ttm):  3.29M
Total Cash (mrq): 6.53M , Total Cash Per Share (mrq):   0.65
Total Debt (mrq):  5.88M , Total Debt/Equity (mrq): 14.73
Current Ratio (mrq): 5.97 , Book Value Per Share (mrq):3.97
52-Week Change: -14.58%
Shares Outstanding: 10.04M , Float:  4.91M

% Held by Insiders:52.07% , % Held by Institutions:8.20%


Electro-Sensors Inc. (ELSE)

“Electro-Sensors Inc is engaged in the manufacturing and distribution of industrial production monitoring and process control systems. It has two operating segments: Production Monitoring and Investments.”Morningstar


Market Cap: 13.69M , Enterprise Value: 5.57M
Price/Sales (ttm): 1.92 ,Price/Book (mrq): 1.20
EV/Revenue(ttm): 0.78 ,EV/EBITDA (ttm): 7.66
Profit Margin (ttm):  15.21% , Operating Margin (ttm): 8.15%
Return on Assets (ttm): 2.75% ,Return on Equity (ttm): 9.67%
Qtrly Revenue Growth (yoy):   12.20% .
Total Cash (mrq):  8.68M , Total Cash Per Share (mrq):   2.56
Current Ratio (mrq): 10.06 ,Book Value Per Share (mrq): 3.34
52-Week Change:   0.25%
Shares Outstanding: 3.40M , Float:1.46M

% Held by Insiders: 56.25% , % Held by Institutions:  8.70%

Internet Patents Corporation (PTNT) 


“Internet Patents Corp is engaged in Patent Licensing Business. The Company's portfolio consists of seven e-commerce patents.”Morningstar


Market Cap : 17.42M , Enterprise Value:-10.76M
Price/Book (mrq):0.61
Total Cash (mrq): 28.77M  Total Cash Per Share (mrq):4.38
Total Debt (mrq): 0.00 , Current Ratio (mrq):62.07
Book Value Per Share (mrq): 4.40
52-Week Change:  -14.79%
Shares Outstanding: 6.57M , Float:  4.43M

% Held by Insiders:50.32% , % Held by Institutions:11.70%

Monday, January 19

Year Ending 2014; Cannibals, Declining Stock Price, Financially Sound, Micro Cap


The goal, find the best stocks based on percentage reduction of outstanding share count comparing the MRQ to the prior year. Stocks with positive 52 week stock price returns, weak financial statement removed. The filter runs for micro cap stocks. 

The following may be worth a closer look














Click for quotes on the stocks above



AETI: “American Electric Technologies is a provider of power delivery solutions to the energy industry. The Company is comprised of three segments: TP&S, E&I and AAT”: Morningstar

AETI, notable value attributes;
Historically cheap valuations based on revenue and book value.
Improving book value per share, Book value per share  2011 = 2.55 Book value per share MRQ = 2.84

PRICE 2011 = 5.08  PRICE 01/20/15 = 4.66

Ariel Investments, John Rogers owns 18.58% purchased at prices greater than current price.

Market Cap: 38.18M , Enterprise Value: 37.73M
Enterprise Value/Revenue: 0.57
Qtrly Revenue Growth (yoy): -12.00%
52-Week Change:   -57.78%
52-Week High:11.19 , 52-Week Low:  4.50
Shares Outstanding: 8.18M , Float:  4.93M
% Held by Insiders:58.56% , % Held by Institutions: 13.30%
Short % of Float : 1.30%

To be continued/completed during the week. 

Sunday, January 4

Ugly 2014 Performance Contributing to 2015 Mean Reverting Candidates

Stocks covered in this post; CTCM,CTG,EPAX,COH,NTP

Before today's post, a quick comment on last week’s mention of Karnalyte Resources. (KRN.TO/ KRLTFStock Trades at 19% of BV and 46% Net Cash


Friday (01/03/15) Karnalyte Resources announced DISCUSSIONS obtaining 700 Million USD financing for the development of Wynyard Carnallite-Sylvite Project. The news should positively impact price; KRN.TO was up 17.50% on Friday. KRLTF changed 12.31%, 10% below the converted exchange rate for Canadian Dollars to USD.


Uncertainty is the major concern. Management’s lack of transparency and dissident shareholder requisition hold back the stock price. Details clarifying the loan’s impact on capital structure; after the price should move higher. A major concern, financing has a lead Indian Bank and would flow through a syndication of other banks. India’s Gujarat State Fertilizers has a 19% stake in the company.


Now today's post. The search started by reviewing all US exchanges;NYSE,AMEX,NAS,OTCBB, OTCPK, about 12,000 listed companies. The universe reduced by selecting the bottom 25% based on stock price returns. The worst or bottom 25% 2014 returns filtered based on financial soundness. Metrics used Z score, Sloan and Beneish to remove companies with possibility of near term bankruptcy or earnings manipulation.Stocks included, Z scores greater than 2.99, adequate interest coverage, and general financial soundness.Further, include only stocks reducing share count from 2011 to MRQ, TTM and debt reducers over the same periods coupled with historical and industry low valuations.


Ideas meeting the criteria and analyzed further are worth a closer look.

CTC Media, Inc (CTCM)

“CTC Media, Inc., is a media company, which operates three Russian television networks CTC, its flagship network, Domashny and DTV”. Morningstar

Mean reverting attributes, 
52 Week Change = -64.19%, 
LTD reduction 39.19M for 2011 to MRQ 14.19M.
Share count reduction 157.23M 2011 to MRQ 155.76M,
EV/Rev = 0.75 trailing dividend yield = 14.20%
% Held by Insiders:63.92%, 
Price near 5 years low coupled with 5 yearlow for P/S and P/B, positive FCF, Z score 4.92
Month end stock price Dec 2011 = 8.77, Dec 2012 = 7.88, Dec 2013 = 13.90, Jun 2014 = 11.05, Price = 4.87 on 01/02/14.


Market Cap: 758.56M , Enterprise Value:    593.95M





















Computer Task Group Inc(CTG)

"Computer Task Group, Inc., is an IT solutions and staffing services company with operations in North America and Europe. The Company's geographical area of operation includes North America and Europe." Morningstar

CTG mentioned in a prior post, November 2014, “Mean Reverting Candidates, Financially Strong”. CTG was $8.80 on post date. Today it sits at $9.53 (01/02/15) still a strong mean reverting candidate for 2015.




Market Cap: 176.65M , Enterprise Value: 128.75M
Trailing P/E: 12.22 , Price/Sales: 0.44
Price/Book:1.52 , Enterprise Value/Revenue:  0.32
Enterprise Value/EBITDA (ttm): 5.50
Profit Margin (ttm):   3.23% , Operating Margin (ttm): 5.43%
Return on Assets (ttm): 8.15% , Return on Equity (ttm): 11.36%
Revenue (ttm):  397.74M , Revenue Per Share (ttm):    26.32
Qtrly Revenue Growth (yoy):  -3.90%
Gross Profit (ttm):   88.71M , EBITDA (ttm):  23.43M
Total Cash (mrq): 28.26M , Total Cash Per Share (mrq):  1.52
Total Debt (mrq):  0.00 , Current Ratio (mrq):    2.80
Book Value Per Share (mrq):  6.24
Operating Cash Flow (ttm): 9.21M per share = .50,
Free Cash Flow (ttm): 10.71M per share = .57
52-Week Change: -47.81%
52-Week High:19.02 , 52-Week Low:8.15
Shares Outstanding: 18.54M , Float:  12.97M
% Held by Insiders:32.95% , % Held by Institutions: 58.10%
Short % of Float (as of Nov 28, 2014): 4.00%

Trailing Annual Dividend Yield:      2.50%


Ambassadors Group Inc. (EPAX)

"Ambassadors Group Inc is a socially conscious educational company mainly engaged in organizing and promoting differentiated travel programs for students and professionals." Morningstar


















Market Cap: 43.46M , Enterprise Value:   -9.81M
Price/Sales (ttm):    0.99 , Price/Book (mrq):    0.90
Qtrly Revenue Growth (yoy):     -21.80%
Gross Profit (ttm): 43.64M ,  EBITDA (ttm):  1.17M
Total Cash (mrq):47.14M , Total Cash Per Share (mrq):   2.77
Total Debt (mrq):0.00 , Current Ratio (mrq):    3.54
Book Value Per Share (mrq): 2.79
Operating Cash Flow (ttm):3.79M , Free Cash Flow (ttm):   -3.46M
52-Week Change:-46.65%
52-Week High:  5.27 , 52-Week Low:2.14
Shares Outstanding: 17.04M , Float:  11.17M
% Held by Insiders:22.04% , % Held by Institutions:   47.30%
5 Year Average Dividend Yield: 4.00%




Nam Tai Property Inc. (NTP)

"Nam Tai Property Inc, along with its subsidiaries is an electronics manufacturing and design services provider to OEMs of telecommunication and consumer electronic products. The Company manufactures electronic components and subassemblies." Morningstar



















Coach, Inc. (COH)

"Coach has developed a narrow economic moat through a brand that enables pricing, sourcing and distribution advantages, and capital efficiency. Despite the company's recent struggles," Morningstar


























Market Cap: 10.28B , Enterprise Value:   8.76B
Price/Sales (ttm): 2.21 , Price/Book (mrq): 4.24
Enterprise Value/Revenue (ttm):  1.87
Enterprise Value/EBITDA (ttm): 6.73
Profit Margin (ttm): 14.54% , Operating Margin (ttm): 23.73%
Return on Assets (ttm): 19.45% , Return on Equity (ttm): 28.33%
Revenue (ttm):  4.69B , Revenue Per Share (ttm):    17.00
Qtrly Revenue Growth (yoy): -9.70% ,
Gross Profit (ttm):  3.30B , EBITDA (ttm):  1.30B
Total Cash (mrq):  907.50M , Total Cash Per Share (mrq): 3.29
Total Debt (mrq):170.00M , Total Debt/Equity (mrq): 6.97
Current Ratio (mrq):2.37, Book Value Per Share (mrq):8.85
Operating Cash Flow (ttm):960.21M ,Free Cash Flow (ttm): 705.62M
52-Week Change:-33.21%
52-Week High: 56.64 , 52-Week Low: 32.72
% Held by Insiders:0.91% , % Held by Institutions: 89.30%
Short % of Float :9.70%

Trailing Annual Dividend Yield:3.60% ,5 Year Average Dividend Yield: 2.30%