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December Magic Formula Newsletter Released

December 16, 2012

This month's newsletter pick is growing at over 10% per year, year after year. Even better, the company has gross margins over 75%, so that growth can throw of tons of cash flow. For years, investors didn't see any of that profit, as management decided to pay it all out to themselves in the form of huge salaries and bonuses. That all changed at the beginning of this year, when an up and coming value investor took control of the board and booted the old management team. The new management team has proven very effective, as they've continued to grow the business at a rapid clip while taking out all of those excess costs.

The company has already announced their looking for strategic alternatives. Given all of the variables in play and the long runway for potential growth, it's not unreasonable to think about a buyout coming in at well over 2x today's share price.

We will buy the shares on Monday.

Download this month’s Microcap Magic Formula Newsletter.

GuruFocus publishes three monthly newsletters. These newsletters are the included features for Premium Members.

1. Ben Graham: Net-Net Newsletter focuses on net-net stocks that Ben Graham would buy. It is released on the first Friday of each month.

2. Micro-Cap Magic Formula Newsletter picks companies that have high return on capital and high earnings yield. It is released on the second Friday of each month.

3. Buffett-Munger Best Bargains Newsletter recommends companies that have high business quality, but traded at undervalued prices. A younger Buffett would buy this kind of companies. It is published on the third Friday of each month.

Also don’t miss:

December Ben Graham Net-Net Newsletter

The pick for December has a market cap closing in on $1 billion dollars, with sales in excess of $2 billion dollars. The company's profits are consistent. The company plays a vital role in the electronics manufacturing industry.

All the monthly newsletters are included in GuruFocus Premium Membership. If you are not a Premium Member, we invite you for a 7-day Free Trial.

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