However, looking through the buyout offer reveals a business with intriguing economics. ROIC is over 100%, and the business has targeted organic growth over 10% per year.
Are those aggressive targets? Sure, but the company's core business has delivered that for the past few years, and the company dominates some attractive, growing niches that make that growth possible.
Making the case even more interesting is that the company's own CEO describes an investment in the company as akin to a "private equity" investment. Simply put, the upside if the company can hit their target is massive. Their own investor presentations highlight the chance to achieve a stock price more than 100% above today's simply through paying down debt through internal cash flow.
Overall, this month's pick represents probably the most interesting situation the newsletter has invested in so far. We will buy the shares on Monday.
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Also don’t miss:
April Ben Graham Net-Net Newsletter
April’s pick is a technology company in the medical device industry that has weathered many storms and remained profitable. The thesis is simple, 80% of the market cap is cash, and an EV/EBIT of 0.82. Earnings and book value have been growing, a hidden gem for sure.
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