Adams Golf (ADGF)
Adams Golf designs, assembles, markets and distributes golf clubs for all skill levels. I have done a lot of research on this company previously, but ended up passing, which didn’t turn out to be such a great idea. If you talk to anyone who knows anything about golf and you mention the name, Adams Golf, they will automatically know the company, which is good because this means that the company benefits from brand recognition. It is very difficult for an unknown company to just start making golf clubs and selling them profitably. At one point, Adams Golf was an unknown company but it was able to break into this business. The founder, Barney Adams, wrote a book, The Wow Factor, which details the company’s history and its struggles in the golf equipment industry.
The problem with the companies that provide golf equipment is that the golf industry is in decline domestically. However, the bright spot is that internationally the industry is growing. The companies that will be able to gain sales internationally should do fine.
The stock of Adams Golf experienced a nice jump in price this month because the company announced a decision to explore strategic alternatives, which could possibly lead to the sale of the company. Currently, the market cap is $60 million or $7.77 per share. There is a chance that if the company sold, it will sell for a price higher than the market cap.
Helix Energy Solutions Group (HLX)
Helix Energy Solutions Group is an oil and gas services company focused on deepwater and subsea markets. It also has oil and gas producing properties. I learned about this company because it spun off Cal Dive International, which focuses on shallow water markets.
The reason why Helix looks appealing is because the sum of the parts appears to be greater than the market cap of the company. It has been documented that Helix was trying to spin off the oil and gas producing properties from the oil and gas services company, but this did not materialize after the BP oil spill in the Gulf of Mexico.
Cal Dive International (DVR)
Cal Dive International is an oil and gas services company that was spun off from Helix Energy Solutions. Cal Dive focuses mainly on shallow water markets. Ever since the spinoff, the stock has been a nightmare investment for its shareholders. In 2009, it traded at over $10 per share and in October 2011, it traded as low as $1.60 per share. Ouch! Some high-profile investors such as Joel Greenblatt were invested in Cal Dive but sold out after unprofitable quarters.
The management is claiming that Cal Dive will return to profitability in 2012 after various cost-cutting initiatives are implemented. If the management is successful, the stock could be a big winner in the future. I would like to get more details on the cost-cutting measures, but it is hard to get the management on the phone.
Blyth Inc. (BTH)
Blyth is a multi-channel operating primarily in the home fragrance and decorative accessories industry. It designs, markets and distributes an array of decorative and functional household products, including candles, accessories, seasonal decorations, household convenience items and personalized gifts. It also markets chafing fuel and other products for the food service trade, and for coffee and tea, nutritional supplements and weight management products.
At first glance, it doesn’t appear that there is anything interesting with Blyth but after you notice that the chairman and CEO bought $20 million worth of stock in July 2011, you can’t help but pay attention. I did not get a chance to speak with the company’s management, but it appears that there is value in the hidden businesses outside of the home fragrance and decorative accessories segments.
Perion Networks (PERI)
Perion Network an Internet content and media company that builds downloadable consumer applications that make the everyday life of its users simpler and more enjoyable. It was founded in 2000 with a single product, IncrediMail, which is an e-mail product sold in more than 100 countries.
When I first looked at this company, I passed because it only had one product. However, the company is growing its product mix as shown in the following chart:
Currently, the company has a market cap of $47 million. The guidance for 2011 EBITDA and net income is $10 million and $8 million, respectively. This valuation looks extremely cheap, especially since the company is growing. I will definitely look into this company in more detail.
Disclosure: The author has no positions in any of the mentioned stocks.