Potential Value; Oversold in the Current Market

Sorry for not posting for some time. Many reasons but I have been working on a datamart to uncover short opportunities.

For tonight I was looking for overlooked or oversold value based ideas. It started with EV to revenue and I then compared this attribute to the average EV to revenue from 2006 to 2009. Only those ideas having a lower TTM EV/Revenue compared to the average 06 to 09 period were considered. The thought was finding stocks that have been oversold with a starting point of sales to enterprise value also with YOY quarterly revenue improvements, negative 52 week return, share buybacks over the TTM, strong balance sheet and other measures.  Below are 3 names to consider adding to a watch list.

IRIS: IRIS International Inc

Price = $9.41
EV per share = 8.22
YOY Quarterly Revenue change = 10.60%
Enterprise Value = 143,937,000
EV/Revenue =
FCF/EV = 4.62%

ISSC: Innovative Solutions & Support

Price = $5.37
EV per share = 3.46
YOY Quarterly Revenue change = 41.70%
Enterprise Value = 58,137,400
FCF/EV =9.54%

PSEM: Pericom Semiconductor Corp
Price = $9.17
EV per share = 7.13
YOY Quarterly Revenue change = 13.60%
Enterprise Value = 177,870,200
FCF/EV =.14%



Off the topic the following RISKY idea may interest some investors
 
This troubled deep value idea is MEAD.

MEAD: Meade Instruments Corp

MEAD
Current Price = $3.70


“Meade Instruments Corp., a consumer optics company, designs, manufactures, imports, and distributes telescopes, telescope accessories, binoculars, spotting scopes, microscopes, and other consumer optical products in North America and internationally.”

4.39 million market cap with no long term debt and TTM sales of 25.49 million with a YOY quarterly revenue increase of 18.90%.

Meade is a recognized brand name in the process of restructuring that has been given up by the investing public. So it’s a mean reversion candidate with an uncertain future.

Book value is 9.63,

Insider ownership 33.16%, 12.50% held by institutions,


MEAD is still restructuring and has yet to make break even results. This risky stock is far from a sure bet in this difficult economy for their high end optical products.

Long: MEAD

Excellent Work on MEAD: from Saj Karsan

Meade Instruments: Easily Overlooked

Meade's Discount Instrumental

I'm still holding shares as I believe firm is worth more than the current 5.8 million.

Prior posts on MEAD:

 Meade Instruments Risky 1-2 year turnaround

Mead: Boring - Small - Obscure - Cheap - Ugly - Ignored

Modest 3 day volume increase in this tiny illiquid stock

http://shadowstock.blogspot.com/search?q=mead

Boring, small, obscure, cheap, ugly, ignored, out of fashion, and unloved

Columbia’s Bruce Greenwald uses this terminology to help investors find value stocks. I’m sure he’s not the first to use that language to find deep value contrarian investments but it’s the mantra many of us use to find stocks.


MEAD could be labeled with the above adjectives.

http://finance.yahoo.com/q?s=MEAD

The price per share was $3.45 on 08/19/10, market cap of 4.06 million with and enterprise value approximately of the same value .

Price ($3.45) - Cash ($3.30)+Total Liabilities ($3.45)= $3.60 – AR (2.84) = $.76

Inventory is 6.72 per share =

Book value = 10.18

Current Assets (12.27) – Current Liabilities (3.42) = $8.85

Annual revenues were 24.61 million or 21.034 per share or 3.45/21.034 = P/S = .16

Meade does have some traditional deep value where net working capital (CA – CL) = 8.85 versus a current price of 3.45

With the extensive restructuring, reduced head count, smaller cost structure, focused smaller product line, new lower cost manufacturing facilities, smaller corporate headquarters and a stock incentivized management team (36% held by insiders) the company has strong acquisition appeal.

Its risky and the current cash will last for about one year at the current run rate but its an interesting play on a brand name product (Meade Telescopes) at nano cap prices 4.06 million.

Check out the great new website

http://www.meade.com/

Long MEAD

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

Modest 3 day volume increase in this illiquid forgotten tiny stock

MEAD: Meade Instruments Corp., a consumer optics company, designs, manufactures, imports, and distributes telescopes, telescope accessories, binoculars and other consumer optical products in North America and internationally.

Market Value = 4.19  Million

Current Price = 4.21
TTM Revenue = 25.49 million
YOY Quarterly Revenue increase = 18.90%

52 Week  Change = 14%
P/S = .17
Book Value = 9.43
no long term debt
YOY Quarterly Revenue increase = 18.90%

Previous mentions with additional information

Long MEAD as part of a highly diversified portfolio in the tradition of Ben Graham