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Hey Friend, May I Have a Dollar for Fifty Cents: Enter EVI
I would like to draw attention to BoomBustBlogger Shaunsnoll and his write
up on Envirostar titled, “A dollar for fifty cents: EVI”
EVI is a well run company with 60%+
of shares owned by management that has an absurd amount of cash on the
balance sheet, no debt, and trades at a ridiculous valuation with a few
likely catalysts.
EVI primarily distributes commercial
and industrial laundry and dry cleaning equipment including a
proprietary line of dry cleaning machines (98% of revenue) with a focus
on environmentally friendly dry cleaning methods and equipment. There
is even a “green” angle here for you environmentalists! Overall
prospects for this business are not great but not terrible. Much of
their dry cleaning products sales goes into hotels, hospitals etc,
which is obviously very weak. They do have some good growth into
international and latin America though, which is ~20% of their sales
and growing. Not exactly the most “sexy” industry but keep reading!
Valuation for this company is
ridiculous given ROE, ROIC, cash flow and balance sheet and there are
some clear catalysts that could unlock value in the next year. Company
has ~80% of market cap in cash, no debt, is fcf positive, insiders own
>60% of shares, and company has respectable ROE, ROIC and EPS
growth over last few years.
…
Summary: So you essentially have 25%
downside and 70%+ upside using relatively conservative estimates, for a
2.5x return/risk ratio with very little risk of permanent loss of
capital. Impossible to know exactly what could happen but it seems
under almost any scenario the company is under valued. Stock could do
anything in the short term but over the next year or two I have a hard
time coming up with any scenario that has less than a 40% return.
Given market environment and limited downside this looks pretty
compelling to me. I am a buyer at anything <$1.20. If the company
starts having multiple quarters of negative net income indicating
likely extended cash burn or if management shows me reason not to trust
them, then I will likely exit the investment.
To read the full write-up as well as ability to download an
accompanying word.doc, visit Shaunsnoll’s microblog on
the BoomBust by clicking here.
Neither I, nor BoomBustBlog necessarily endorse this work, nor have we
verified the contents, for it is independent and research and opinion
posted by a BoomBustBlog contributor but I do encourage all readers to investigate,
comment and share.
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"a proprietary line of dry cleaning machines (98% of revenue)"
Reggie, this is the key line here. Now turn off your computer, go hang out on the couch, and think about what this line means. Then come back to the computer and apologize for posting this.
I am confused. What happened here? Will we get more sure "bets" touted in the future?
If this had been my first visit to ZH it would likely be my last. Fortunately I know that this sort of post is an anomaly.
Looks like somebody needs his posting privileges pruned back a little.
Wow, $400k of EBITDA. What kind of fucking pump and dump scheme is this? What, Reggie, not enough people buying your shitty recommendations and grammatically challenged research reports? Take this dogshit elsewhere.
no dividend. Sorry, not interested. PE 29.67...
But what a strange article to post on the top strip.
Weird!
pennystock scam. You buy it now for a buck and in 2 weeks you'll get 2 cents on the dollar for it.
Looks like a Money laundering operation to me!!!
;-)