No. of Recommendations: 8
Interesting. From Adam Mead:
“MED caught my eye with its history of profits and cash/investments compared to its current market cap. The company reported $100MM in net income in 2023 and was profitable at least as far back last 2014. Though Q1 TTM profits were $67MM, it’s still only 4x earnings. The company reported $156MM cash/investments as of the end of Q1, or 57% of its market cap. Oh, and it has no LTD, just some minor operating leases. Adjusting for net cash you’re at a little more than 1x earnings. My first thought is, “What am I missing?” I need to do some more work on this but it’s an exciting find.
Edit/Update as of 6/6/24: I purchased shares for myself/clients after D.A. Davidson released a report with a new price target and shares fell to an implied market cap of $250MM. At these prices — down 80% from their 52-week high — I think there’s a huge margin of safety. So long as the company doesn’t go bust — revenues and profits very likely will decline — current prices reflect massive pessimism. Unlike most of its peers, MED has a highly variable cost structure, allowing it to remain profitable while shrinking. Sales could dip to 25% of their peak and the company would still trade at 4x earnings.“
