Negative EV, Strong Cash Flow, 95% Gross Margins

Today’s stock:

• Share Price: $100

• Net Cash: $102

• Free Cash Flow: $23

• Gross Margin: 95%

“You will see things in public markets in your lifetime that you will not believe.” - Warren Buffett

I’ve pitched all kinds of stocks on here that are valued as if they’re dead.

But I don’t think I’ve ever pitched one quite like this.

In today’s instance, net cash represents the entire market cap. Nothing new there.

It earns a nice profit, but the market seems content to value the operating business at $0. Again, nothing new.

So what’s different?

Today’s stock has consistently earned gross margins over 90%.

That is extremely rare.

This business operates a time tested business model - one that has been around for hundreds of years, and has a long history of producing outsized returns on invested capital.

So, why does the stock trade so cheap?

Is it in Bangladesh or something?

Nope.

It’s right here in the United States.

Shares recently got crushed due to an event that has no bearing on unit economics or future cash flows of the business.

It’s just one of those times where public markets create a unique opportunity.

Today’s stock is…