11/10/2009

Meade Instruments Corp (MEAD) is a RISKY 1- 2 year potential turnaround

Pros

For the current value of 2.7 million, shareholders receive “valuable brand names and intellectual property that provides MEAD a competitive advantage in the marketplace”. The Coronado brand name has a unique niche in the area of solar astronomy. 7.4 million in sales for the most recent quarter with a 17% gross profit margin.

Solid balance sheet with per share data as follows: EV = $2.39 ($2,789,130), Price = $2.50(2,917,500), Sales = $6.51, Cash = $2.07, AR = $5.17, Inventory = $7.47, Total Liabilities = $5.03

Read more

2 comments:

Carrigaline said...

It's worth noting that famous value investor Paul Sonkin is on the board here. He makes mention of his MEAD investment in an interview with Street Capitalist - http://streetcapitalist.com/2009/08/10/my-interview-with-paul-sonkin/

For my part, even at these low prices, I'm not entirely convinced that MEAD can be turned around. Even in the boom times of the last decade, they only showed profitability in dribs and drabs. With a slump in consumer spending, the telescope business will be lousy this year and lousy next year. The question is, will MEAD even have enough cash to make it through the downturn?

I think there are less risky alternatives that have just as much upside than MEAD to be honest.

ShadowStock said...

Thanks for that link it was a good read!

Not exactly a vote of confidence from P Sonkin who is now on the MEAD board. “ By the time we got inside we realized that the business was in much worse shape than we would have thought. We would have done fine except the economy was the kind of nail in the coffin.”

I still thought the idea was worth a mention for some investors. As you know there are times when a troubled company can fall in price so much that it become attractive.

John