USA Mobility, Inc. (NASDAQ:USMO)

12/17

value stock

swing for the fences = healthcare + IT + 7% divided.

Nice dividend, cheap price here

Good business stability, very undervalued

Magic formula, insider buying.

Paging is a business the is slowing each year. The stock looks cheap, but the stock price is going to zero.

Technology companies can rise quickly in value if their particular technological value offer superior attributes over alternative products or services. This process can also work in reverse and that appears to be happening with USA Mobility. Their tight cost controls has maintained positive earnings, but what of the declining revenues?

Revenue growth is key here. Until that turns positive, the thumb points down.

Straight-lining declining revenue over past three years indicates company is out of business in four more years. Currently at trailing P/E of 4.3, should be more like 3. 2x book value, 2.5x cash. Dividend currently higher than next year's predicted earnings.

Key question is how they handle the decline. Can pagers find a core must-have customer base, and can costs be under that core revenue by 30% or more? Otherwise USA Mobility will have to close shop or sell off. Will leadership do this in a shareholder-friendly manner, or just grab what they can and flee?

I know of a probation officer who uses these government phones. This company has a good market opportunity if they continue to provide a solid secure product.

Low PE with good dividend.

look at the chART. It's marching...

Over the next 12 months, I expect the bear market to continue. If I could choose "cash" to outperform, I would do so. In a market like this, a stable utility with a dividend yield over 4% should outperform.

magicformulainvesting.com screen at $153M market cap, top 25 companies on June 26, 2008

Low P/E and high Dividends

lying dividends screen

This is a total long-shot. But if you reinvest dividends, there is a huge potential for profit if they ever diversify out of their shrinking industry. Income and Revenue is shrinking every year, but cash flow is still there from improved margins. I have an immaterial amount of holdings, but it's reinvesting those dividends like a champion. I think this a perfect example of what Warren Buffett would call a "cigar butt." Maybe the next future Guru will buy this and use the cash flow to become a holding company. It seemed to work for Berkshire Hathaway.

Target price of $14.25/sh by March "09. Risky - it's taken a horrible beating but I think we've about bottomed out.

Niche market although eroding. Tight focus on cost saving and returning capital to shareholders. Consistent performace despite lower consumer base. Good dividend at or near 52 week low.