11/29/2015

Cheap, Tiny, Obscure Deep Value Nano Caps


These nano cap ideas trade near their NCAV. Many are profitable with low EV/EBIT valuations.


ESWW, OIIM , PARF, AXLE, FRD, TTLO, TWMC, TATT, EGT, SPRT, MPAD, RSKIA, SLGD, INTT, ELSE, FKWL, HIHO, ISIG,ENZN,LTRE


Environmental Solutions Worldwide Inc. (ESWW) manufactures and sells emission control technologies. It offers emissions testing and environmental certification services for on-road and off-road diesel and natural gas engines, chassis and after-treatment markets. Morningstar

ESWW is cheap. Discounted further when management filed a 15-12G on 4/1/15. ESWW deregistered hence no future requirement to file with SEC. This should deter deep value investors not afraid of illiquidity. Don't panic illiquid pink sheet shares can be worth owning with improving fundamentals. But extra caution is required. I've emailed investor relations to inquire on publishing quarterly and annual audited financial statements on their website (waiting for response). Environmental Solutions Worldwide is currently traded on an interdealer quotation system, OTC Pink®, under the symbol "ESWW".

Market Cap: 7.42M, $Price 55.00,Enterprise Value: 2.12M
Trailing P/E: 0.78 ,Price/Sales:  0.29
Price/Book (mrq): 0.46 , Enterprise Value/Revenue (ttm): 0.08
Enterprise Value/EBITDA: 0.35
Profit Margin (ttm): 44.99% , Operating Margin (ttm): 21.84%
Return on Assets (ttm): 17.71% ,Return on Equity (ttm): 112.45%
Revenue (ttm):  25.48M , Revenue Per Share (ttm):196.09
Qtrly Revenue Growth (yoy):-28.80%
Gross Profit (ttm): 12.37M  EBITDA (ttm): 5.98M
Net Income to Common (ttm): 11.46M
Diluted EPS (ttm): 70.52
Total Cash (mrq): 8.31M, Total Cash Per Share (mrq):  61.35
Total Debt (mrq):  2.98M , Total Debt/Equity (mrq):  18.42
Current Ratio (mrq): 3.29 , Book Value Per Share (mrq):  119.98
Operating Cash Flow (ttm): 5.24M , Free Cash Flow (ttm):  1.75M
52-Week Change: -21.43%
52-Week High (Dec 31, 2014):   82.50 , 52-Week Low (Nov 3, 2015):  40.00
Shares Outstanding:    135.00K , Float:  15.11K
% Held by Insiders:  41.00%




 













   
ESWW has an impressive board for a tiny company. Board has a strong venture capital and investing experience coupled with Ivy League educations.


As I mentioned above don't let deregistration and illiquidity deter a deep value investment. Don't panic illiquid pink sheet shares can be worth owning with improving fundamentals. But extra caution is required. Read this helpful article by noted Graham and Dodd value investor John Deysher "Going Dark: The Harsh Reality of Voluntary Deregistration"

As an example DVLN filed a 1 for 7,500 reverse split to deregister their shares.I foolishly sold my shares for ~ $800 based on the original pre reverse price of .10 cents. This illiquid stock barely trades but does trade for $5,100 per share(52wk Range:$4,000.00 - 5,600.00.

See one of my original post on DVLN.
Market cap on post date 5M now 29.68M.
http://shadowstock.blogspot.com/2010/07/dvl-inc-dvlnob-potential-5-bagger.html
Further DVLN posthttp://shadowstock.blogspot.com/2011/01/mediocre-companies-selling-at-cheap.html





O2Micro International Ltd. (OIIM): founded in 1955 is a Taiwanese electronics firm that designs, develops and markets power management components for the Computer, Consumer, Industrial, Automotive and Communications markets. Its focused on LED and power management products.

Price and P/B near 10 year low, P/S near 5 year low. OIIM trades below NCAV, buybacks are accretive.
The Net-Net Working Capital Per Share for the quarter that ended in Sep. 2015 was 2.16,Net cash value per share 1.78.


Market Cap : 45.73M , Enterprise Value: -9.25M
Price/Sales:    0.78 , Price/Book:  0.45
Revenue (ttm):  55.79M , Revenue Per Share (ttm):  2.12
Qtrly Revenue Growth (yoy): -11.10%
Gross Profit (ttm):  32.74M , EBITDA (ttm):  -12.10M
Total Cash (mrq):  54.98M , Total Cash Per Share (mrq):  2.13Total Debt (mrq):   0.00 , Current Ratio (mrq):    8.55
Book Value Per Share (mrq):  3.72
52-Week Change:  -22.37%
52-Week High Jul 6, 2015:$2.82 , 52-Week Low (Nov 23, 2015):  $1.58
Shares Outstanding:  25.84M , Float:  19.16M
% Held by Insiders:  10.91% , % Held by Institutions:  37.10%



























































T.J.T., Inc. (AXLE) : founded in 1977 AXLE recycle axles and tires to the manufactured housing industry. It operates recycling facilities in Idaho and California and serves ten western states. Note this tiny nano cap does not report to the SEC, results are published on website. They deregistered in 2005.

Market cap is 1.41M, enterprise value excluding current liabilities is 1.269M = MC 1.410M - Cash .141M =1.269M or .279 per share; enterprise value including current liabilities = MC (1.410M) + CL (.476M) - Cash(.141M) = 1.745M or .38 per share.

The stock is deep value cheap but illiquid. Its for long term patient investors. I've owned the stock many years ago,  spoke with management and believe management is honest. Management has taken large pay cuts to keep the company going though the industry downturn. It has done the right things to survive and now likely to benefit in the recovery. Management continues to report quarterly financial statements and audited financial results on the website. No position today. NCAV is 1.776M or .39 per share. Equity is 3.399M or .749 per share. Total assets are 3.874M or .8546 per share. Included in those assets are .388 Real Estate Investment, PPE of .592M,  Deferred long term tax assets of .600M.  TTM sales were 5.736M or P/S of .24



To be continued ; the market is expensive but value exists hidden in otc,  nano cap stocks for the patient investor. Stocks I'm working up for a deeper review are
 
Torotel Inc. (TTLO)
Paradise Inc. (PARF)
Trans World Entertainment Corporation (TWMC)
TAT Technologies, Ltd. (TATT)
Entertainment Gaming Asia Inc. (EGT)
Support.com, Inc. (SPRT)
Micropac Industries Inc. (MPAD)
George Risk Industries Inc. (RSKIA)
Scott's Liquid Gold Inc. (SLGD)
inTEST Corp. (INTT


Electro-Sensors Inc. (ELSE)


















Franklin Wireless Corp. (FKWL)















Highway Holdings Limited (HIHO)
Insignia Systems Inc. (ISIG)
Enzon Pharmaceuticals Inc. (ENZN)

12/03/15 Declares special cash dividend .25 cash on $.72 stock introduced (see table below)

Learning Tree International Inc. (LTRE)
Friedman Industries, Incorporated (FRD)

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To be continued



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