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ATRION Corp. Message Board

  • microcapguru microcapguru Aug 28, 2007 3:29 PM Flag

    good call smokey....

    Even back at the high, i still think Atrion is undervalued.

    Even assuming modest EPS growth, they can raise the dividend 20% year almost ad infinitum. And pile up cash while doing it.

    Management's challenge will be to redeploy the cash intelligently, and given their record, you have to give them the benefit of the doubt.

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    • I think ATRI got a nice plug on the Motley Fool. I didn't see it until today, which could explain the greater than average volume today. Actually, I e-mailed Rich Smith a number of years ago concerning ATRI, when he had written and article on what to look for in good companies one might invest in. Atrion was trading in the $30's then. I suggested he look at our company. He did and e-mailed me back, saying ATRI met all of his criteria except one (don't ask me which one, I need to fish back through a bunch of letters to fish it out) but, he would keep an eye on it. About a year and a half later when ATRI was in the mid $50's, I remember e-mailing him again of what a great little company Atrion was and asking him if it met his criteria, yet? He e-mailed me back that he would look at it again but, I never heard back from him any further. It's nice to see it's on his radar now. I have to look back and find that e-mail to see what he was questioning. It's piqued my curiosity, now.

      • 1 Reply to smokeyglacken
      • smokey -

        I have been strongly recommending ATRI on the Motley Fool Hidden Gem service for the last 2 years, starting a message board there (should now be available to all to view). HG could not recommend ATRI because the volume is too low. They have big problems already with the large POP when issues are recommended (ones with much larger trading volumes than Atrion.)

        But it does have an informal following there. We own it in all our managed accounts at Freedom Mountain Investments.


    • Guru - Thanks for leaving open the door so wide to question (I won;t use the word challenge...too antagonistic for a Yahoo! board).

      Here are a few questions your post raises:

      1) What is an appropriate P/E ratio to use once one has calculated their 12-month forward e.p.s. estimate?

      2) My model shows that without share repurchases, the company likely ends 2008 with $15mm in extra cash. Since the liquidity of the shares makes an open market share repurchase almost impossible, are the more likely to a) do another MDTA?, decale a special, one-time cash dividend before the tax rate on cash dividends goes back up, 3) make an acquisition?, or 4) find additional internal investment opportunities (p.s. I see only $9 million of capex in 2008).

      thanks in advance

      BTW, its having anopther one of those "up days during a market meltdown"

      • 2 Replies to alexalekhine
      • Hi guru, Thanks but, we love this company, don't we? Congratulations, ATRI management!!!

        aa, all the possibilities and options that you raise appear to be realistic and wonderful, in my humble opinion. Now, just imagine if they can show up with one, or even two, new successful products in the not too distant future? The thought is almost too scary to think about. But, what if.........

      • All great questions, if only i had the answers!

        1) P/E ratios are the great unknown for investors. As they are totally psychologically driven, they are by definition unknowable and unpredictable. As a value investor, I simply try to play the odds--low P/E stocks have upside, high P/E stocks have downside.

        In a vacuum, you have a really well run debt free company in a long term growth sector with 20+% operating margins that should be able to grow sales in double digits and eps slightly higher. I still think this merits a mid twenties PE, so on the 6.65 or so of earnings there is still substantial upside. But it may never get that multiple--that's the unpredictable part.

        I have no idea what they will do with the cash. A nice tuck-in acquisition [say 10mm in sales or so] would be a great outcome, but the one thing management doesn't have is an M&A track record, so there is still risk there. I certainly think an internal development focus would be likely. Capex depends to a certain extent on growth, as they have to invest in presses and molds for new business.

        And it was pretty impressive to hit a new all time high today of all days! Of course, it could be down 5 points on 100 shares tomorrow am LOL

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