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2009 Forbes 200 Best Small Companies (Part 2) : Dolby, Synaptics, Jos. A. Bank Clothiers, Capella Education Company, Middleby Corp

November 16, 2009 | About:
Saj Karsan

Jae Jun

67 followers
In this list, I’ll list up the valuation results of companies 11-34 from the _Stock Value Spreadsheet.. You can also calculate the stock value yourself with the free dcf spreadsheet as well as the free Benjamin Graham formula spreadsheet.

Dolby (DLB)

dolby.gifDolby is the type of company you just cannot go wrong with whenever you buy the stock at the right price. The only difficultly is that DLB rarely trades at a cheap enough price.

I’ve been following DLB for a couple of years now and the company just continues to perform excellently. As long as people have ears and listen to things, DLB will be there somehow. The company collects royalties from its sound technology licenses and with Dolby technology in the cinema, tv, blu ray, Windows and the list goes on.

DLB has always had excellent fundamentals and organic growth. FCF over for the past 5 years has grown by about 56% and management has been able to make a return of 18.4c off every $1 of cash invested.

Capex is very low compared to its revenue which is why every 20c from $1 of sales is converted to FCF.

All I can do is just wait for the price I’m hoping for.

  • Price as of writing: $42.06
  • DCF: $42.06
  • Graham Formula: $40.19
  • EPV: $34.41
dlb-valuation.gif

Synaptics (SYNA)

logo_synaptics.gifAnother company that looks to be continually improving. Synaptics sells user interface devices such as the touchpad on your laptop, the iPod, touch screen devices and so on.

Despite the recession 2009 the company posted it’s highest revenue backed by big positive flows of cash to the bottom line. This may be due to the huge exponential demand for innovative user interfaces in devices.

While CROIC is average at 8.9%, cash growth from operations increased by 29.4% over the past 5 years while FCF grew at 20.7%.

Margins are also improving while at the same time they’ve been reducing debt.

  • Price as of writing: $25.14
  • DCF: $27.48
  • Graham Formula: $21.55
  • EPV: $17.96
syna-valuation.gif

Jos. A. Bank Clothiers (JOSB)

josb-logo.jpgOne of the many missed opportunities of 2008. In part 3 of the 2008 Forbes best companies list, JOSB was one of the few rare companies to be trading a what I considered to be a margin of safety. Now, it seems like the company value continues to advance with the new estimate now up to the $50’s compared to the mid $40’s last year.

Over the past 5 years, the company exhibits excellent fundamentals with great FCF growth, good consistent CROIC and returns.

Margins is super steady and consistent.

Capex seems to be hanging steady at the $30m range while revenues continue on up. JOSB seems to be a great example of price meeting value.

  • Price as of writing: $42.62
  • DCF: $50.18
  • Graham Formula: $51.99
  • EPV: $53.20
josb-valuation.gif

Capella Education Company (CPLA)

capella-logo.gifEducation stocks are effective recession proof investments but I’m just not sure why they all trade at such high premiums. Of all the education stocks I’ve gone through, they all look to be trading much higher than intrinsic value.

While the future may be rosy, growth is just too murky to try and estimate which is why my conservative values of future predictions indicate CPLA well over intrinsic value.

I personally have yet to meet a value investor that owns a big position in education companies.

  • Price as of writing: $71.91
  • DCF: $43.25
  • Graham Formula: $41.53
  • EPV: $44.51
cpla-valuation.gif

Middleby Corp (MIDD)

midd-logo.jpgMakes commercial cooking equipment. MIDD regularly makes the list and always seems to defy the odds by producing excellent results.

The company has never been at a loss during the past 10 years. Capex is very low at less than $10m but their net asset book value is negative as a big portion is made up of goodwill and other intangibles.

  • Price as of writing: $47.52
  • DCF: $50.06
  • Graham Formula: $67.09
  • EPV: $20.32
midd-valuation.gif

Summary

Despite a large portion of the list being made up of growth stocks, a handful of companies are worthy of studying and keeping an eye on. We’ll see what the next bunch can offer.

Disclosure

No positions in any stocks mentioned.


Jae Jun

Old School Value.

About the author:

Jae Jun
Saj Karsan founded an investment and research firm that is based on the principles of value investing. He has an MBA from the Richard Ivey School of Business, and an undergraduate engineering degree from McGill University.

Rating: 4.3/5 (7 votes)

Comments

batbeer2
Batbeer2 premium member - 4 years ago
>> I personally have yet to meet a value investor that owns a big position in education companies.

Mason Hawkins and Warren Buffett have serious positions in WPO.
Dr. Paul Price
Dr. Paul Price premium member - 4 years ago


WPO = Kaplan education company

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