2009 Best Small Companies Part 6

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 91-100. Finally up to the half way point and there seems to be more value type companies towards the mid and bottom of the 200 list. Probably because you get to see more smaller cap companies.

Sport Supply Group (RBI)

Makes and distributes sporting goods, recreational and leisure products.

Free cash flow growth much higher than it’s CROIC so  I wouldn’t be surprised if growth slows down a couple of years later. Long term projection won’t be able to accomodate such a high growth rate.

Company has taken on big amount of debt for the first time in 10 years but they’ve always been able to create far more FCF than the debt or interest payments, so this could be strategic.

Being a retail operation, margins are thin but RBI has been able to maintain their inventory turnover. Not a predictable company at first but looks to be well managed.


Spectrum Control (SPEC)

Makes electrical components and systems such as coax filters, antennas and RF filters.

SPEC had a good 2007 and 2008 where they turned it around and managed to post good results the past 2 years. However, the consistency of FCF is rather scattered and this goes for the margins as well.

CROIC is 8.6% which is lower than the standard I define but overall, the fundamental numbers look decent. While SPEC may be about 30% cheaper than its intrinsic value, a better understanding of the company is needed to form an opinion.


Astronics (ATRO)

Supplier of lighting, electronics and power distribution systems for the global aerospace industry.

Was absurdly overpriced when I looked at ATRO last year and 1 year later, things look to have reverted to the mean.

FCF growth is good and other fundamental metrics I use from the stock value calculator to quickly value companies is fair but accounts receivables just continues to go up. Although sales is increasing at a faster rate, I can’t help but wonder whether sales terms are too lenient or whether they have internal process inefficiencies related to collection of payment.

Shame I don’t work across from the small branch of ATRO anymore. Would have liked to snoop around and ask questions. 🙂


United States Lime & Minerals (USLM)

Makes lime and limestone products supplying primarily the construction, steel, municipal sanitation and water treatment, aluminum, paper, glass, roof shingle and agriculture industries. USLM also has natural gase interests, although I’m not quite sure what that means myself.

Not a company or business I am familiar with so be warned that my comments may prove to be useless for USLM.

FCF, CROIC growth has been flat at close to 0% growth. Good thing though is that the company has been paying back debt and has been increasing tangible shareholders equity at a nice rate. More pie for shareholders.

Another interesting point is that SG&A is extremely low. I don’t know whether this is the norm across the industry but it’s good to know that USLM executives are not receiving their own private yachts and taking private jets for joy rides.


Friedman Industries (FRD)

FRD comes up quite often in the value investing radar and has appeared on my net net screener several times. And at current prices, it sure looks tempting.

The company is involved in steel processing, pipe manufacturing and distribution. FRD is a tiny company. A micro cap in fact which is why I’m surprised it made it to the list because the company must have shown explosive growth to have made it onto Forbes.

FCF growth is inconsistent and during the past 2 years FCF, CROIC, FCF/sales, margins were not impressive at all. The company survived but FRD doesn’t seem to be a company you want to hold just before a bust as management doesn’t seem to be experienced in such situations.

Probably better to buy it when the dust has settled, like now maybe.


List of the Best Small Companies

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


No positions in any stocks mentioned at time of writing.

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