The recent market sell off has created a lot of good opportunities. One I like right now is Nathan’s Famous (NATH).
Even though I already have a significant portion of my portfolio in Nathan’s, I feel that the current levels are too cheap to ignore for a company this strong.
Here are some reasons why I just bought more shares today:
- Strong brand with diversified revenue. Nathan’s has one of the top brands of hotdogs in the business that are distributed through restaurants, food service and grocery stores. People still need to eat and I don’t feel the economy will get bad enough where people cannot afford a hot dog and Nathan’s has one of the top hot dogs.
- Great balance sheet. No significant long-term debt and penty of cash ($33.2M). In a market with tightening credit, they should have no problem continuing to expand with their own money. They also have low operating costs.
- Great valuation. If you take away the cash, the company is valued at $57.54M. If you take last year’s income ($5.54M), the company is making a 13% return per year on it’s assets. The company has continued to grow revenue and income year after year.
Below is a great article from June 2007 that goes through past numbers in greater detail…
Nathan’s Famous: This Dog Can Hunt
Full Disclosure: I own shares of Nathan’s Famous.