Forbes Best Small Companies Part 7


This is a continuation of the series of valuing each of the 200 Forbes Best Small Companies. The official list can be found here.

2009 Forbes 200 Best Small Companies Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6

In this list, I’ll list up the valuation results of companies 101-135.

Digital River (DRIV)

A software company for e-commerce solutions.

Fell by about 35-40% when the company was informed by Symantec that the contract will not be renewed. Will have an effect on future earnings power but to what extent is something you should consider in your further research.

DRV has strong fundamentals. It boasts a FCF growth in 5 years of 24%, CROIC growth of 15% and FCF/sales of 22.1%. Software companies do not store inventory so obviously their top line numbers will travel down to the bottom line.

Earnings yield is at 15.3% while FCF yield is 3.9%.

  • Current Price: $26.55
  • DCF Valuation: $32.44
  • Graham’s Intrinsic Value: $33.43
  • EPV: $24.25

Air T Inc (AIRT)

Cargo transport and logistics company.

From an initial glance, AIRT looks to be an interesting opportunity. AIRT pays a 3.37% dividend has some really good fundamental figures. FCF and CROIC is 14% and 15% respectively. Earnings yield of 310%! and FCF yield of 15%. However, the P/FCF is a tad high at 18. Another interesting point is that a company such as AIRT would have a capital structure with more debt, but debt has been decreasing. It isn’t an issue anyways, especially when the FCF to debt ratio is 60%.

  • Current Price: $9.80
  • DCF Valuation: $22.48
  • Graham’s Intrinsic Value: $23.53
  • EPV: $20.47

I’m liking AIRT from what I see.

Twin Disc (TWIN)

Sells marine and heavy duty off-highway power transmission equipment.

Second one to study up on from this list. Decent numbers and margins considering the industry it is. Has been FCF positive for the past 10 years or 9/10 years if you use owner earnings.

  • Current Price: $10.48
  • DCF Valuation: $18.62
  • Graham’s Intrinsic Value: $24.69
  • EPV: $16.70

List of the Best Small Companies

View all of the first 100 companies in the following spreadsheet
Forbes 2009 200 Small Companies
Forbes 2009 200 Small Companies

Disclosure

No positions in any stocks mentioned at time of writing.

  • Tom

    AirT has excellent numbers on it but with my rough calculations, there is no longer a 50% MOS being that I have it valued somewhere between $19-21 range.. it’s also trading above its tangible book value

    What are your thoughts on DSWL and DVR?

  • investor

    The stock symbol for Digital River is DRIV

  • Adam

    What do you think of HCII? I know you don’t like insurance companies but look at their balance sheet. It is absolutely incredible. They are trading at 70% of net cash!! They just picked up more policies in Florida from Citizens.

  • Hi Tom,

    I’ll be answering your question in the forum.
    http://www.oldschoolvalue.com/forum/value-stock-idea/air-t-inc-airt/

    Can’t say much for DSWL or DVR. Never heard of them. Will quickly take a look though.

  • Adam,

    Since insurance companies are required to have a lot of cash, in order to pay claims, I’m not sure whether trading at 70%to cash is enough. Even now there are so many banks that are trading at cents to the dollar but their fundamentals are still horrible.

    I’m sure you know more than me as I have no idea how to value them.

  • Hi that is a very fascinating view, It does give one food for thought, I am very delighted I stumbled on your blog, i was using Stumbleupon at the time, anyway i don

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