National Presto Industries, Inc. (NYSE:NPK)

As military, a lot of the products (ammunition) are not what are the high expended items in Afghanistan and Iraq. NPK's items will be shot consistently year-over-year as part of standard training doctrine. The focus of defense cuts in the near-term are going to hit Overseas Contingency Operations funding, which main expenses are logistical support (approx $1MM per servicemember in Afghanistan), equipment procurement, and facility construction that has been so utilized by the military (my Marine Corps especially), large weapons system procurement (goodbye F-22, EFV, and F-35 delays), and personnel costs (both cutting the force and skyrocketing pay/benefit/retirement/medical expenses. Simulators are the biggest long-term threat but nothing replaces putting real rounds down range.

I cannot speak for the rest, but it seems to me that babies will consistently be desecrating diapers and consumer product sales will improve as the economy gets back on its feet.

I like this stock as a solid dividend payer with low future volitility.

Companies making inexpensive convenience items are going to have plenty of room to grow as globalization marches on.

http://www.fool.com/investing/general/2011/12/20/small-cap-dividend-dreams.aspx#commentsBoxAnchor

12/16

NPK's prez owns over 25% of the shares, but has a modest salary. The special dividend they've been awarding for a while now is where she gets her real money every year, so I don't think its going to go away any time soon. The DoD is always gonna need more ammo, and NPK's new-ish contract with the DoD is good through 2015, so I'm comfortable with that. And as Boomers get older more of them are gonna need adult diapers, and NPK has started broadening their customer base for their Absorbent division, so that's got good prospects. It's an eclectic mix of products they produce, to be sure, but as I'm focused on getting the best, safest dividends I can get, I figured its worth a 3% place in my portfolio, so I just bought some today with the market being down as it was. The P/E is nice and low right now, too, so pluses there. A hidden gem, IMHO...

CEO owns 30% of stocks!!. Conflict of interest is our side.

CEO makes $400k/year. No options or other dilutive shenanigans. Share count only slightly up in the last few years. Very spartan approach to running a company, you'll either be very attracted to her style or bored to tears. -I'm in.
The business:
1.) Adult diapers. -As yet not cash flow positive, turned profitable in '09, likely to lose primary customer (Medline) in '13. -Neutral to negative, may improve if Diesel, trees, and electricity get cheaper...
2.) Housewares. Popcorn poppers, your Grandma's canning stuff, various things you don't really think about. Decent margin on these, most sales come from Wal-Mart. Potentially losing sales to private label brands.
3.) Ammunition. The sell fuzes for rockets, ammunition for 20mm (most all aircraft), 25mm (Bradleys and LAVs), 30mm (Attack helicopters), and 40mm (Grenade launchers). Margin on this stuff is about 30%, and not too variable. The current contract for 40mm with the army goes through 2015, and Presto is one of 2 suppliers. As long as commodity costs don't soar, they'll have a reliable revenue stream. Even with defense cuts, this ammo has to be shot in training, and thus must be replaced. It's expensive, and the threat here is probably simulators with high fidelity in the long term, not necessarily defense cuts.
They just bought a non-lethal ammo company in Arkansas called ALS. This spreads their ammo out a little more into law enforcement, not just military. Estimated at 7.5m in sales, we'll see what they paid, but history says it probably isn't a king's ransom, and they have no debt. Earnings move around a little because all their cash is placed in securities and USG bonds.
Dividend is $1, and they pay a special dividend around March timeframe that raises that yeild to about 7-ish depending on the previous year's performance. That's how the CEO can afford... whatever she buys with it. From my research, not much.
This company isn't going to blow your socks off, but it has averaged a great compounded annual return since 2001 if you factor in dividends. Capital seems to be flowing more toward the munitions side of the business, which returns more money.

Even if earnings drop by 1/3, the multiple is historically much higher than the current 11-ish, so you've go a margin of safety, and you will probably still get a total dividend in the 5s while you wait.

Well run company, good dividend. No one knows about it. Too boring for anyone to care.

The product mix is very entertaining and insulates the company from a downturn in one area of the economy. Also, it is products that need repeated purchases. Strong balance sheet, good dividend.

Yes

The company's special dividends make it a compelling buy at this level.

Deej

Trades in a pretty predictable range, peaking around the time of its special dividend and troughing about six months later. I'd get in at $90 or so, get out at $120, and if it retraces back to $80 again, buy it hand over fist. Another cyclical name that should recover along with the broader market averages, although not quite in the same way as the better-known stocks that comprise my CAPS picks, since this stock is a chronic victim of dividend-capture investors.

China growth

No debt. Great 5-year ROE. Solid cash flow.

Low P/E, No debt, and hidden dividends. Overall a solid company to invest in the longterm

HG

This stock returns cash to the shareholders rather than spending it on misadventures as some other companies do. Also a lot of it's competition in the small appliance sector has gotten out of the business. It has a clean balance sheet (no debt), the earning have grown at a 23% rate over the past 5 years (including 3 recession years) and it is trading at an 11 PE on trailing earnings.

mfg - a bit of everything
div 8% including the annual special.
Total Debt / Equity    0.00
Price Earnings    11.50
Price/Sales    1.47
Price/Book    2.37
Price/Cash Flow    10.10

Yes.