Weekend Values – January 30, 2011

Posted January 30th, 2011. Filed under Investing Links

As usual, here are a some value investing links from the past few weeks:

Alapis SA (APSHF.PK)

Long Thesis. Most investors would agree that Greece is in big trouble. However, often the best bargains appear when the rest of the market is running away.

OSV presents a nice guest writeup on Alapis SA, the leading Greek pharmaceutical company.

The business has remained profitable during the crisis despite a large debt position and receivables balance, and overall exposure to the Greek government.

The result is one of the most statistically cheap stocks I’ve ever seen, trading at a P/E of 2.7 and P/B value of 0.075!

Despite the possibilities of a complete meltdown in Greece, it is an idea worth considering.

Pulse Data, Inc. (PSD.TO)

Long Thesis. This week’s SumZero writeup and also featured on AAOI, Pulse Data is a Canadian company that controls the 2nd largest library of seismic data on much of Western Canada.

It is a great business (once the data is collected that is – it is very expensive to initially gather), employing EBITDA margins above 50% and a FCF yield north of 25%. The company recently made a decent-sized acquisition, so the old company insiders have been liquidating their new position in PSD, putting downward pressure on the stock.

As for catalysts, the company is aggressively paying off the debt balance and seems committed to paying a dividend within the next 12 months. Increased insider buying is also a good sign as well.

RadioShack (RSH)

Long Thesis. A favorite among many value investors (and featured on Weekend Values a few weeks ago), RadioShack released disappointing preliminary Q4 earnings. In addition, the press release also announced that the company’s CEO, Julian Day, would be retiring.

The stock dropped sharply on the news despite the fact that the business continues to be profitable and earns high returns on capital. The share repurchase program is one of the most aggressive I have ever seen – the company bought back roughly 20% of shares outstanding in the previous quarter alone.

Even using conservative estimates, the stock trades at approx. 4x EV/EBITDA, which is extremely cheap, especially when compared to some of the latest retail buyouts like J. Crew.

Balkrishna Industries (BOM: 502355)

Long Thesis. For those investors looking for exposure to foreign markets, this is a great writeup on India’s leading manufacturer of off-road tires, Balkrishna Industries.

BKT is a decent-sized company, with a market cap of $11.5B INR (~$250m US) and a presence in over 120 countries. The stock trades at an EV/EBITDA value of approx 5.5 despite growing at 30% per year over the past five years.

Management is putting billions into a new production plant that will expand capacity by 70% by 2014, and has a track record of producing strong returns on capital, with a pre-tax ROIC of 26%, 22.5%, 21.8%, 19.6%, and 23% over the past five years.

2009 – 2010 Spin-off & Parent Company Stats

Special Situations. The Special Situations Monitor has put together a great list of the major corporate spinoffs over the past two years. Only two spin-offs (and 3 parent companies) trailed the market since the event.

Spin-offs have been proven to beat the market in the long-run so all of these stocks are worth watching closely.


If you have links or suggestions to detailed analysis from other value investors, please drop me a line using the Contact Form.

I’m always open to ideas from other investors, especially for a thoughtful and well-researched investment articles.


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