KSW and WILC

I thought I'd give my Blogees a glance at a couple MFI stocks that I own that are not on the traditional list. KSW is a Heating and Air Conditioning Contractor in the NY metroplex. They are certainly not on the list because of size... only 23m in market cap. They used to be on the list in the days when the list was expanded below 50m. Here are their current stats per my calcs:

		ksw
+	Operating Income After Depreciation	2.87
-	Minority Interest - Income Account	-
=	Income for Calculation	2.87
	Diluted Shares Outstanding	6.277
	Share Price	3.76
+	Market Cap Calc	23.60
+	Preferred Capital	-
+	Debt in Current Liabilities	0.06
+	Long-Term Debt	1.07
	Cash and Short-Term Investments	16.98
-	Excess Cash	16.98
=	Enterprise Value	7.75
+	Property Plant and Equipment - Net	2.73
+	Receivables	21.44
+	Inventories	0.71
+	Other Current Assests	0.81
+	Working Cash	-
-	Accounts Payable	13.80
-	Current Liabilities - Other	7.61
=	Invested Capital	4.28
	Earnings Yield	37%
	ROIC	67%

Note they are a 23m market cap firm with over 16m of excess cash. They just posted some premliminary figures regarding 2009 (note above financials are rolling 4 quarters ending 9/30/09). Revenues for 2009 ended at about 64.4m, down from 93m in 2008... clearly the economic drop hurt them.

But here is the silver lining and why I think they are undervalued. Their backlog at 12/31/08 was $62.5m (which seems to be 100% translated into revenue). Their backlog at 12/31/09 was 121m! A potential doubling of revenues! They made 67 cents per share at 94m of revenues, so 67 cents in 2010 doesn't seem outrageous, which makes a $3.89 stock price with their balance sheet, extremely cheap. I am tempted to buy them lock stock and barrel... if I just had 23m.

WILC is my other small cap (though it has grown) in my MFI portfolio. They are a Kosher food producer. I know, not exactly sexy. But it is a nice niche. They have gone from $2.12 to $7.06 since I added them last May. They are no longer the extreme value play that they were 8 months ago, but they had operating income of over 8m in 2009 against an enterprise value of 49m. That is an earnings yield of 19%. They are still bullish about the future:

Outlook

Mr. Williger commented: "We are pleased to report significant improvement in our sales and margins in 2009 on the strength of our higher-margin product introductions. While we did see pressure on sales from the global recession in much of 2009, we are encouraged by the strong sales volumes and margins in the third and fourth quarters of 2009. We are optimistic about our start in the first quarter of 2010 and believe we can continue to benefit from a multi-channel approach and broad kosher product base that addresses a trend toward more health-conscious food choices. We will continue to focus on controlling expenses and production costs to keep our prices competive, and we will continue our efforts to expand our reach to retail and wholesale markets in the U.S."