Wisdom from Benjamin Graham for a tough market

“It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity - provided that the buyer is informed and experienced and that he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment."

The employment industry may be the last place most investors would look for a new investment opportunity. But JOB listed on the AMEX may interest some adventuress investors.

Let’s start with a very brief introduction and some negatives. The CEO total compensation for 2007 was ~543,041. But with only 5.17 million shares outstanding the CEO costs approximately .11 per share or 3% of the last 12 months of revenues. This payment is significantly higher than their staffing industry group.

The current quarterly revenue compared to the prior year’s quarter dropped 21.60%. But the enterprise to revenue is the lowest in the industry near .07. With cash per share at .91 and only .37 in total liabilities these amounts compare very favorably to a closing price of only .69.

Management has recognized conditions have been challenging and recently announced proactive measures to turn the company around. Their recent press release stated “The Company closed three of its unprofitable offices this year, and we will not rule out closing other underperforming branches."

"Right now, reducing our overall general and administrative expenses is a top priority. We are maintaining tight controls over spending, and continue to critically review our cost-cutting options. We are prepared to implement some of those options if a turnaround is slow in coming."

The full story