Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
|
|
|
| Westaff
(WSTF) -- An Undiscovered Gem that is Now Valued at Just 10% of
Annual Sales |
Published: July 25, 2005
In my weekly premium
newsletter -- Undiscovered
Micro-Cap Gems -- my goal is to introduce readers to a variety of
promising micro-cap investing ideas that they may wish to consider for
their portfolios. In doing so, I generally look for small, neglected
companies that have been overlooked by conventional Wall Street sources.
I also look for undervalued firms that are trading at a steep discount
to their intrinsic value. Many of these individual investment ideas have
the potential to deliver triple-digit percentage gains in the years
ahead.
Below you'll find an
in-depth look at one such investing idea that I introduced my readers to
in a recent issue. To
gain access to dozens of similar investing ideas each and every week,
you'll need to subscribe to my Undiscovered
Micro-Cap Gems service. In the meantime, I sincerely hope you enjoy
today's sneak peak at one of my most recent micro-cap investing ideas...
--------------------------------
Westaff Inc. (WSTF, $3.60)
--------------------------------
Westaff
Inc. (WSTF)
Sector = Services
Industry = Staffing & Outsourcing
Market Capitalization = $58.8 million
Enterprise Value = $67.6 million
2004 Revenues = $601.5 million
2004 Gross Profit = $101.8 million
2004 Revenue Growth = +13.4%
Insider Ownership = 58.4%
Institutional Ownership = 17.6%
Insider Activity (ttm) = Negative
Enterprise Value/EBITDA = 5.6 |
Westaff is a staffing firm that
specializes in the placement of industrial, clerical, and technical
workers. While it focuses on filling temporary staffing needs, the firm
does provide temp-to-hire and permanent placement, as well as ancillary
services like payroll, drug testing, and background screening. The
company conducts business from over 250 offices nationwide, and also has
substantial overseas operations in the UK, Australia, and elsewhere.
From a valuation standpoint, WSTF is one of the most attractively priced
stocks in the staffing industry. Of the many financial ratios available,
I consider Price/Sales (P/S) to be one of the best ways to value stocks
in this group. On that basis, Westaff currently ranks as the most
attractive stock in the industry with a P/S ratio of just 0.09. That
compares very favorably to a five-year average for the general industry
of 0.61. If Westaff were to trade at an industry average P/S multiple,
then the company's shares would appreciate more than seven-fold from
current levels.
Another useful way to gauge stocks in this sector is by examining cash
flows. Again, Westaff looks strong on this front as well, with a
Price/Cash Flow (P/CF) ratio of just 3.56 -- well below the industry
norm of more than 17. Here is a quick breakdown of how WSTF currently
stacks up against its peers:
|
Category
|
WSTF |
Industry
Average |
| P/E |
13.5 |
33.0 |
| P/CF |
3.6 |
17.1 |
| P/S |
0.1 |
0.8 |
For a relatively small firm
with a market capitalization of less than $60 million, Westaff has a
substantial book of business, with annual revenues more than ten times
greater than the firm's market value -- $624 million and growing.
Furthermore, the strong and improving cash flows generated by the
company's operations have steadily increased the quality of its balance
sheet. Also, net tangible assets have risen nicely over the last few
quarters. Although the firm's future was somewhat uncertain a few years
ago, all of these factors help confirm my belief that the company is now
on the right track.
Last quarter, though net income slipped slightly lower, revenues rose
+5.3% to $138.3 million. Most of this growth was attributable to the
company's international operations, where revenues (after stripping out
the impact of favorable foreign currency fluctuations) jumped nearly
+18%. Furthermore, gross margins expanded by 40 basis points during the
quarter to 17.3%, as an increase in average billing rates helped offset
costs associated with Sarbanes-Oxley regulations.
Westaff has reduced its long-term debt in recent years, and shareholder
equity is increasing. I'm also encouraged to see an options package in
place that provides incentives for management to maximize
shareholder value. Currently, insiders own just over half of all
outstanding shares. If the company can string together a few more
quarters of solid results, then shares of this undervalued gem could
move sharply higher.
-----------------------------
Important Note: The above article
was merely a small excerpt from a recent issue we sent to subscribers of
our premium value investing service -- Margin-of-Safety
Investing. In each issue of that newsletter, editors Nathan
Slaughter and Paul Tracy deliver an in-depth look at a variety of other deeply discounted
stocks that should provide investors with a solid margin of safety at
current prices. To receive your copy of our most recent issue of Margin-of-Safety
Investing, as well as other guidance similar to this twice per
month, you'll need to subscribe to this publication. To learn more,
please visit:
https://www.streetauthority.com/subscribe-msi.asp
Thanks for reading!
|
Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
|
| To receive
in-depth guidance on today's leading value opportunities, plus educational guidance, please subscribe to
Nathan Slaughter's premium value investing newsletter --
Half-Priced
Stocks |
|
|
|
Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
and you don't have to worry about oil prices, automaker bailouts, or
what the Fed is up to -- because every "bad" economic development
actually helps some investment or another.Your investing life can
get a lot simpler -- starting today.
Go here to learn about Amy's simple investing strategy.
|
|
|
