A nice note from contrarian investor Nicholas Bodnar on Emerson Radio (MSN), the cheapest stock in the Small and Micro Cap Screener.
The stock’s at $1.35 with cash backing of $1.45. It’s a rare stock that trades at a discount to NCAV, and cash, which, even with a terrible business, makes it a free hit.
Summary
- Zero debt company trading below NCAV.2014’s free cash flow per share is $0.22 yet earnings per share are $0.05.
- This suggest an undervaluation at current prices.
- Earnings, revenue and FCF have dropped significantly due to loss of business from a huge customer.
- I expect the company to stay profitable in the future due to the simplicity of running the business.
NCAV Valuation
Assets: 63,625,000
Liabilities: 3,766,000
Preferred Stock: 3,310,000
Common Shares Outstanding As of June 25th, 2014: 27,129,832
NCAV: (63,625,000-3,766,000-3,310,000)/27,129,832=$2.08
The current price of MSN is $1.37 and the cash per share of MSN is $1.45. Buying MSN for the price it is at now is a steal based on NCAV investing.
Read why he likes the stock here: Emerson Radio Could Be A Good Buy If Downward Pressure Continues – Emerson Radio Corp (NYSEMKT:MSN)
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