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.
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.
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