Wednesday, July 08, 2009

It's All Gravy

Not a great day for the good guys. My portfolio certainly has a Chinese leaning and it wasn't a good day for Chinese stocks.

CDII -8%
CMED -2.5%
CSKI -2.9%
QXM -5.8%
UTA -5.9%
WH -4.8%

But the good news is that I found a new stock that I suspect will shortly show up on the lists: GRVY. It was up 50% today on stellar earnings (Gravity Reports First Quarter of 2009 Results) and I suspect their chart will look like ADY when they had great earnings last May (ADY went from $19 to $40 in about 2 weeks).

I calculated wht GRVY's ratios would be with the recent quarter added in:

+ Operating Income After Depreciation 5.73
- Minority Interest - Income Account 0.05
= Income for Calculation 5.67

Diluted Shares Outstanding 27.796

Share Price 1.60
+ Market Cap Calc 44.47
+ Preferred Capital -
+ Debt in Current Liabilities -
+ Long-Term Debt -

Cash and Short-Term Investments 47.34
- Excess Cash 47.34
= Enterprise Value (2.86)

+ Property Plant and Equipment - Net 4.09
+ Receivables 5.12
+ Inventories -
+ Other Current Assests 4.36
+ Working Cash -
- Accounts Payable 2.42
- Current Liabilities - Other 3.52
= Invested Capital 7.63
Earnings Yield -198%
ROIC 74%

Look at the numbers. Even after today's 50% run-up, they have a market cap of 44m and 47m of cash (actually now 53m, I did not update that). The shareholder equity is $68m, so they are trading at about 2/3 of book value.

Revenues are ramping up, +32% over last year and up 9% sequentially. If/when the stock crosses the $50m market cap barrier, they should hit the charts as the earning yield is essentially off the chart and ROIC is very good at 74%. Toss that in with growth and trading under BV and this is one appealing stock... and you guessed it, I bought in today.

They are in the online gaming industry, certainly a low capital industry... but also has low barriers to entry. We'll see how it works out.

1 comment:

Albert said...

Marsh, how'd you find the stock? I ask because it was written up on VIC on April 22nd, so I knew it sounded familiar. Unfortunately, I didn't buy any...