2 micro cap value near 52 week low

OFI: (Overhill Farms)


Current Price = $4.39

Overhill Farms, Inc. is a manufacturer of prepared frozen food products for branded retail, private label, foodservice and airline customers. But as with many tiny companies there is some customer concentration risk. The largest purchasers of their products, Jenny Craig, Inc., Panda Restaurant Group, Inc., Safeway Inc. and H. J. Heinz Company, Inc., accounted for approximately 25%, 22%, 17% and 12%, respectively, of their total net revenues during the fiscal year ended September 27, 2009.

The company has been aggressively reducing debt and has still remained profitable even with the reduced sales by ~ 20% for the recent YOY quarter. But the current price may have over discounted this temporary setback. At least the idea may be worth keeping on a future watch list. Management has kept the share count stable with the current shares outstanding at 15,823,271 versus 15,204,424 for 2006. Total debt was 63,731,395 for 2007 and was reduced to 28,008,664 for recent quarter. EV to sales ratio was .72 year ending 2006 and .50 for the TTM. Historically the after tax ROIC has been solid; 14.16% (TTM), 13.66% (2009), 17.32% (2008), 8.84% (2007), 10.89% (2006).

Key executive compensation has unfortunately grown must faster than shareholders value based on the stock price. Key executive compensation (3 positions) increased to 1,460,954 for the period ending 2009 an increase of 58% over the 2005 amount of 847,395.

Idea number 2: Nano Cap

SPRO: SmartPros Ltd

SmartPros, sells professional education for accounting and engineering professionals. The programs come in a variety of online and off-line CPE/CLE solutions to help individuals, corporations, firms and associations meet requirements.

Current Price = $2.32

EV = $2.29

52 week low 2.30


SGA is 47% of total revenue. GP margins have dropped to ~ 52% for the prior 12 months from 60% in 2005. Valuation based on EV to Sales has improved from a 2005 EV/Sales of 1.535 to the current TTM EV/Sales of .71

GP/EV = 84%; YOY quarterly revenue -17%; current dividend yield 1.60%, CFFO/EV = 11%,

Looking at historical cash flow and earnings its possible the stock is currently trading at a strong discount to normalized earnings. Share count has remained constant at around 5 million for the past 5 years.

Key Executive Compensation was 636,651 for the period ending 2005 and increased 65% to 1,055,002 for the period ending 2009. The stock price is down ~ -6% over the same period.


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