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For a bit of background, Universal Security makes smoke alarms. You can find an example of one of their smoke alarms here and their website here.
The business is, to be honest, a crappy one. Earnings for the first quarter were absolutely disastrous. However, what makes this stock so interesting is not their current earnings level.
What makes them so interesting is the sheer amount of assets that each share represents and that the company is repurchasing shares.
Consider this: Universal’s NCAV (current assets less all liabilities) comes in today at just under $4.50 per share (I’ve got it at around $4.47 to be precise). That alone is higher than today’s price of$1.3m in comp last year and have a pretty outrageous bonus structure (see at the bottom of p. 8 of their proxy). For a company that $13.3m in sales last year, $1.3m in salary seems way, way too high. It’s even greater than the figure I flagged as excessive in fellow net-net Surge Components (SPRS).
Even with those concerns, though, I think UUU is way to cheap to ignore. I have a nice position in the stock and may continue to add on weakness. I only hope the company follows my lead and continues to buy back shares!!!
Disclosure- Long UUU, SPRS
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