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Posted by: DavidWX (IP Logged)
Date: November 5, 2013 08:10AM
I've read several articles on Cobra Electronics. They are all pretty positive, saying that now that the lawsuits are out of the way they should become profitable again. It seems we don't know the settlement terms of the patent lawsuit settlement, though there will probably be royalties paid by Cobra to victorious patent owners.
They do seem to have diversified from CB's in the past fifteen years, but they seem to dominate the markets they are in, and I'm not sure any of these markets are growing rapidly.
People talk about them trading at fifty percent of book value. On their balance sheet, about two thirds of their book value is an unsold inventory of finished goods, which has increased in recent years. I don't know if this is really good, and I can't see them being taken over for their unsold inventory, since the buyer would probably have to spend money keeping retain pipelines open, and make sure people didn't lose faith in the brand if the company was really bought for unsold inventory. If you buy for unsold inventory and not ongoing earnings, you might be shutting down factories and production.
So is this stock really that good?
Stocks Discussed: COBR,
Re: Cobra Electronics
Posted by: gurufocus (IP Logged)
Date: November 5, 2013 09:45AM
The company seems to be losing money about half of the times. In this case its balance sheet and cash flow are important. However, although it does not have debt, it doesn't have cash either.
Its book value are mainly from unsold goods and receivables, not high quality.
This is certainly a risky investment. Not much margin of safety.
Stocks Discussed: COBR,
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