HWWProject

Work thru your numbers and assumptions before investing. Buying cash-flow positive or even break-even is difficult these days in some markets. If you buy stocks you're familiar with performing your own due diligence, so spend enough energy and time before you commit to a rental property, which is likely a longer-term investment than a stock. I probably wouldn't hire a property manager until reached 5 rental properties, then only if it's worth my time. Few years ago I created a spreadsheet to calculate rental property investment returns, offered here: http://healthywealthywiseproject.com/research-offers/rental-real-estate-analysis-excel-spreadsheet/

Agree watching capex will be important in the future, as it looks like they may be outgrowing current facility. I looked at their capacity for expansion, and some 10-year data here: http://healthywealthywiseproject.com/2016/04/security-like-best-armanino-foods/ (article also on SA) Margins did tick down slightly in 2015, but that's from record 2014 margins. Gross and Net are still above 3 years ago. The most important margin is around 2009 they began earning excellent returns on capital. They've treated shareholders very well, buying back 9% of shares since 2010. Currently there are no outstanding stock options. Overall a nice little stock I think Buffett would love if he managed smaller sums (small cap with room to grow, food business -easy to understand, capable, shareholder-friendly mgmt).

2015 10-K is out, and had a chance to review the decade of annual reports. This is a very well run company. Revenue doubled in the past decade, and operating expenses didn't budge much (they only operate one mfg plant). So cash went to the bottom line and net profit margin also doubled. Add in shareholder-friendly practices ie. share buybacks, and Pre-tax profits per share have quadrupled, going from 3 cents/share to near 20 cents/share.

Energy Focus (NASDAQ: EFOI) manufactures one of the most reliable tubular LED lamps in the industry, offering an incredible 10-Year warranty. Strong sales to the US Navy has been the stock’s main catalyst. However, they are rapidly expanding into the commercial market. The company’s long-term target is +50% organic sales growth. 2015 sales were $64.4 million, a 184% increase. I’m interested in EFOI due to their excellent return on tangible capital of 26%, and Gross Margin of 42%. The stock price spiked from $4 to $27 last year as sales to the US Navy ramped up, then fell hard and has settled around $7.20 recently. LED lighting is a very competitive and price-sensitive industry. Yet the potential market is huge, with only 1% penetration for tubular LED's against fluorescent lighting, a technology that hasn't improved much since the 1940's. My full write-up here: http://healthywealthywiseproject.com/2016/04/energy-focus-efoi/ EFOI seems to be in hyper-growth mode, yet is not currently priced as such. Any insight/comments on the company or industry are welcome.

A news diversion to point investors away from the fact sales are not recovering.

I seem to recall reading on their website (maybe last year's 10-K) that 'Costs in excess.." that you circled is basically 'Accounts Receivable'. You bring up a good point as that is almost all of their current assets, so it would be important to investigate that line further. I believe they sub out a lot of the actual manufacturing, and just do the assemblies themselves. They say this makes them light on PPE/Capex. You can see they have very little PPE compared to total assets. I agree this will always be a cyclical business, may be a good investment if we're in the low point of the cycle for them. I think its' worth waiting on the new 10-K.

Interesting Risk/Reward here. CPI Aero (CVU) is a U.S. manufacturer of structural aircraft assemblies for aircraft and helicopters in both the commercial and defense markets. After a huge loss in 2014, they seem to be back to profitability in 2015. Trading just below NCAV. Per February investor presentation, expects record 2015 Revenues and has a large $420M backlog. The recent DOD delay in shelving the A-10 Thunderbolt could bring in a huge order this year. But then there is a big negative - they've just delayed their 10-k - now to March 30th. CVU doesn't meet some of my quality metrics, and hard to put a normalized earnings on it, so I am staying away for now. But a profitable company trading below NCAV may be a good short-term play here so thought I'd share. It has been in business since 1980, provides vital aircraft parts to our fleet, would not seem likely to go out of business.

New Investor Presentation March 16th: http://ir.chipotle.com/phoenix.zhtml?c=194775&p=irol-presentations Doesn't paint a nice picture to me. Paid meals still down around 25%. Even if the growth story is still in place, the stock price is still too high for my taste. I'd be interested around $310.

I'll need to see Capex and handful of other items from annual report as I calculate my own margins. May be too soon for me to say 'better margins' forgive my exuberance. Happy I got in earlier this week and that 4th quarter seems to have done well.

AMNF up 3% today on release of 4th quarter results. from press release - "All annual 2015 numbers reported above are new records for the seventh year in a row. " The march of higher sales and better margins seems to continue with them. I posted a table with analysis of last 4 years financial statements in article here: http://seekingalpha.com/article/3886106-buffett-small-cap-gem-armanino-foods-distinction?v=1455202358&commenter=1

Buying A shares? Baller... Ha! No but I wish. Just using A shares as a proxy. My buy price is actually based on Buffett's '2-Column' valuation method. Was pleased that it correlates well with 1.2 x BV

I developed an optimization method that utilizes Kelly, Sharpe ratio and projected returns to determine position sizing among assets. Asset classes are those suggested by work of Markowitz. More description here: http://healthywealthywiseproject.com/optimal-asset-allocation/ I adjust portfolio twice a year. Been pleased with results first two years, and am more confident that I'm putting more money into asset classes which offer greater risk-adjusted returns. more info on my thoughts on Kelly (I adjust Kelly results for stock market as suggested by Ed Thorpe) http://healthywealthywiseproject.com/research-offers/the-kelly-formula-for-stock-investing-growth-optimized-money-management/

Patiently waiting as well. My current buy price is $178,500 at A shares.

They've grown sales on basically the same asset base (a single manufacturing plant), so a 5% increase in sales results in significantly more free cash flow. They've been very shareholder friendly with the extra cash, both dividends and buying back shares (rare for OTC stocks).

Armanino Foods has been mentioned as a Buffett small-cap. As sales continue to steadily increase, so do the margins. It seems to be a real gem - shareholder friendly OTC stock. Pays a dividend. Files quarterly/annual reports. Sales were recession-resistant in 08/09. The original family still owns a fair amount of stock. It had a hiccup in 3rd Quarter, international sales fell (perhaps mostly currency translation). Another concern is I believe they are renegotiating the lease in 2016 for their primary manufacturing plant. Their press release indicates 4th quarter doing well. Info is difficult to find on this (or any) OTC stock. There's good discussion and links in this thread. Selling at around 10% pretax earnings yield. I bought an initial position yesterday. Would look to increase on weakness.