Ambassadors Group, Inc. (EPAX)

cornpalace (61.93) Submitted: 11/19/2008 8:52:02 PM : Start Price: $7.93 EPAX Score: +6.93

Ambassadors Group promotes, and plans educational excursions for middle school on up to business professionals. There are very little assets required for this business so returns on invested capital are huge. Also the company has a negative capital structure, because it receives payment from customers long before they have to pay for the cost of the trips. The only investment the company has to make when a customer orders a trip is a small hedge in foreign currency to ensure that the price quoted will be profitable. These trips are at high in price (3500-7000) yet also offer college and continuing education credits. Even though these trips are expensive, education is something parents will find funds for. 2008 and 2009 should be difficult years, though the company should make a little under 1 dollar per share this year and hopefully a little more in 09. This is considerably less than the ~1.50 it made in 07. The company had said since 9/11 that it was going to hold on to a considerable amount of cash because it knew its business was very susceptible to the business cycle and terrorism. This policy is enabling the company to return capital to shareholders through very advantageous share buybacks, still paying a .46 a share dividend and maintaining a pristine balance sheet.I think it is worth at least 25 and when the economy turns I do not think a return to the 40's is out of the question by say 2012 or so.