Aside from the industry, this month's pick looks attractive on a variety of metrics. It's trading for just 6x EV / EBIT, and it's shown that those EBIT numbers are not just a flash in the pan- its EBIT number has been the same for the past six years.
However, lest you think this is some boring, no growth company, consider this: EBIT has been held back by huge legal expense. The company is putting those legal expense behind it, and one of their businesses could realistically grow 50% YoY for the next few years. Their CEO certainly seems to think so- he's mentioned a target earnings number 3x higher than today's in the next two-three years.
Add it all up and this month's pick seems to have the best of all world's- fast growth, strong earnings, great ROIC, and a firm catalyst.... all masked by litigation expenses that appear (for the most part) to be in the rear view mirror.
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September Ben Graham Net-Net Newsletter
September's pick is a bank with a checkered past that was heavily involved in subprime lending. The bank was required to wind down all subprime products and is in the process of liquidating. The bank has sold their loan portfolio and deposits to a Pennsylvania bank, which is pending approval. The bank is selling for 56% of adjusted book value. Upon sale completion book value will be mostly liquid cash.
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