Packer16 Posted December 22, 2009 Share Posted December 22, 2009 Given the lack of clear cheap stocks out there now has anybody looked at high cash flow business that have declining sales but are selling at low multiples like ELNK, IACI, FLWR, UNTD and USMO (the Blue Chip stamp business of our day)? The one danger in these types of stock is re-investment risk (a manager takes the great cash flow and re-invests it in bad deals). ELNK and UNTD appear to be the best of the bunch trading as 2.0 and 4.0 x FCF respectively. Packer Link to comment Share on other sites More sharing options...
shalab Posted December 22, 2009 Share Posted December 22, 2009 djco, wsc and brk.b all fit the bill. All these have steady/increasing cash flows which makes it better IMO. Link to comment Share on other sites More sharing options...
claphands22 Posted December 22, 2009 Share Posted December 22, 2009 Hey Packer, if you are interested in ELNK and UNTD, I would definitely suggest taking a look at SYTE. SYTE mrkt cap 3.9M 09/30/09 9-month cash opex was 1.5M The CEO is shareholder friendly, has made intelligent share repurchases in the past. CEO owns (I think) over 10% of the company, and dash owns 10% of the company as well. The company depends on buying cheap customer lists for future profitability. CEO is very selectively, he declines 90% of the deals that come up because he doesn't like the price. That being said, I haven't bought a share but I still think the company is interesting. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted December 22, 2009 Share Posted December 22, 2009 The company depends on buying cheap customer lists for future profitability. I've looked at SYTE before, but the issue over buying customer lists and then retaining customers bothered me. Also, I was quite concerned with the viability of this business model going forward. What also annoys me about SYTE is that it's annoyingly difficult to trade when you're dealing with tenth's of a cent! If Mr. Dash is reading this, he should start pushing the board to institute a 100-to-1 split! Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted December 22, 2009 Share Posted December 22, 2009 For my suggestion, the most obvious Blue Chip comparison is one that's closely tracked on this board, ITEX! Although it's a bit opposite to what you're looking for though (higher P/E but growing revenue), it looks reasonably cheap. Link to comment Share on other sites More sharing options...
Guest ValueCarl Posted December 22, 2009 Share Posted December 22, 2009 It's interesting that this pre-dawn internet based company, "Blue Chip Stamp," a Buffett/Munger owned entity is being mentioned on this board along with some trying to connect the dots. Some time ago, your board's host, Mr. Parsad, led me to an outstanding book, "Damn Right!," the biography of Mr. Charles T. Munger, a man who I briefly had the good fortune to meet when he signed it for me. I promise that the learning lessons and history contained in that book won't be "DAMN EXPENSIVE!" like Cramer's advice when you're done. Additionally, I believe there are sprinkles of a more powerful "Blue Chip Stamp" investment protocol, because of the internet, in your midst, while being tied to, yet again, the young, handsome, Persian King, also in your midst. :-* Link to comment Share on other sites More sharing options...
claphands22 Posted December 23, 2009 Share Posted December 23, 2009 The company depends on buying cheap customer lists for future profitability. I've looked at SYTE before, but the issue over buying customer lists and then retaining customers bothered me. Also, I was quite concerned with the viability of this business model going forward. What also annoys me about SYTE is that it's annoyingly difficult to trade when you're dealing with tenth's of a cent! If Mr. Dash is reading this, he should start pushing the board to institute a 100-to-1 split! Jack Erhartic, the CEO of SYTE, has thought about doing a reverse-split but hasn't made any decision about it yet. If you want, you can send him an e-mail at frank[at]sitestar(.)com and explain your concerns. Jack does a good job responding to e-mails. Link to comment Share on other sites More sharing options...
beerbaron Posted December 24, 2009 Share Posted December 24, 2009 If you don't mind liquidity and canadian market you can take a look at Xentel DM. It's a telemarketing company with a market value of 2 to 3 times FCF or net earnings, no debts and is currently selling at around 0.6 times BV. Not as cheap as when I bough it a few months ago but still a fairly good price. Also, this one could have a nice lottery ticket on the background as they have a lawsuit pending where they could win up to 50M$ (for a 6M$ cap!). Also, management seems to realize their business is not a growing one so they started distributing the money. I lately took a look at envelopes company Supremex seems like a fairly good buy with FCF of 40M and a market cap of 72M. I decided not to invest due to intense price pressures from their North-American competition but it is a good example of declining high yield coupon. Currently selling at 65% BV... but still some goodwill to go. I might buy if it goes down another 20% or if insiders buy. BeerBaron Link to comment Share on other sites More sharing options...
calonego Posted December 24, 2009 Share Posted December 24, 2009 I think Frank E. owns 20% or 22% of SYTE. Link to comment Share on other sites More sharing options...
calonego Posted December 24, 2009 Share Posted December 24, 2009 AOL may be interesting to some of you as well. Link to comment Share on other sites More sharing options...
ubuy2wron Posted December 28, 2009 Share Posted December 28, 2009 It seems to me that to invest in cheap cash flow generators like savings stamp co''s one needs either a good capital allocator at the helm or a controlling interest so that you can make the capital allocation decision to turn it into a decent investment. Link to comment Share on other sites More sharing options...
Guest kawikaho Posted December 28, 2009 Share Posted December 28, 2009 Given the lack of clear cheap stocks out there now has anybody looked at high cash flow business that have declining sales but are selling at low multiples like ELNK, IACI, FLWR, UNTD and USMO (the Blue Chip stamp business of our day)? The one danger in these types of stock is re-investment risk (a manager takes the great cash flow and re-invests it in bad deals). ELNK and UNTD appear to be the best of the bunch trading as 2.0 and 4.0 x FCF respectively. Packer ELNK? Man, I thought they went the way of the dodo bird. ELNK, UNTD, and IACI are all cigar butt businesses, IMHO. They are like Graham style newspapers, but in our modern age equivalent. Out of the bunch, I like the fact that REN TECH is the number 1 majority owner of ELNK and USMO. USMO sounds like an interesting business, and I've never heard of em before. I should take a better look at it. I've usually seen stocks with Ren Tech as the majority owner do well. The last one I've seen was ORH. :-) Too bad I got too cheap waiting for that one to go below 50. Link to comment Share on other sites More sharing options...
beerbaron Posted December 28, 2009 Share Posted December 28, 2009 It seems to me that to invest in cheap cash flow generators like savings stamp co''s one needs either a good capital allocator at the helm or a controlling interest so that you can make the capital allocation decision to turn it into a decent investment. It depends, if funds are redistributed to the stockholders then it can be considered as a high yield coupon with decreasing interest rate. Management must be aware of the situation and accept it. It's quite rare because the financial community considers a declining sales company a failure. BeerBaron Link to comment Share on other sites More sharing options...
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