Dirt Cheap, Asset Heavy, and Off the Radar
A Classic Cigar Butt: $100M in Sales, $100M in Assets, $13M Market Cap
“Found a company with $100 million of sales, generates $10 million of free cash flow, the market cap is $13 million and the enterprise value is $33 million. They also own all of their facilities and equipment which cost over $100 million.”
That is basically the thesis.
It is all you need to know.
The company is cheap, they own assets and they generate free cash flow. Despite the cheap stock, I have yet to see a single person write this company up.
Here is a little more context on the thesis.
The market cap is $13 million and with $20 million of net debt, the company has an enterprise value of $33 million.
Sales have rapidly expanded over the past five years. In 2021, sales were up 16%. In 2022, sales were up 22.5%. In 2023, sales were up 20.2%. In 2024, sales flattened out and were only up 0.8%. And so far in 2025, sales are down 6%.
Even though sales are down so far in 2025, the company has started to see operating leverage, and the company should be a tariff beneficiary.
The company is an auto supplier to the big three automobile manufacturers. All of the company’s facilities are located in Michigan and any increase in domestic demand will benefit the company.
General Motors just announced they will be expanding the production of the Cadillac Escalade to an assembly plant in Michigan. In addition, General Motors plans to invest $4 billion in U.S. facilities, which they announced just this June. The company should benefit from this General Motors expansion as that is right in their back yard.
The company successfully transferred a pension plan to an insurance company in 2024. This transfer will continue to pay eligible retirees their benefits, while relieving the company of any further funding liability. This should increase cash flows meaningfully as employee pension benefits have been as high as $2 million in recent years.
Total invested capital in this enterprise is substantial. On the books, gross property, plant and equipment totals $144 million. This includes $387k of land, $12.3 million of buildings and $131 million of equipment. The margin of safety is real with owned real estate including: a 200k sf plant on 25 acres of land, a 100k sf plant, and a 47k sf plant.
The company also owns substantial current assets including $20 million of inventories, $18.4 million of accounts receivable, $1 million of company owned life insurance, offset by only $10.1 million of accounts payable.
Revenues are around $100 million. In 2024 they generated $5.1 million of operating income, $9.1 million of cash from operations and spent $1.2 million in capex. The company is trading at 4.0x 2024 free cash flow.
The stock is dirt cheap. It is a typical old school Buffet play. A company trading significantly below liquidation value and generating cash. The management team owns around 42% of the shares outstanding. There are no super voting shares. I am not sure who owns the remaining float. But anyone who can get control of a large block of stock could potentially enact some change.
If you are an activist investor, apply here!
Let’s dig in…