My last choice is a maker of automotive, aerospace and fire protection products Gentex (NASDAQ:GNTX), which is best-known for developing a rear-view mirror that automatically dims, making nighttime driving much safer. Despite all the trials and tribulations of the automotive business a few years back, it never lost money; nor did it ever stop paying a dividend. It’s a quality company.
Is Gentex undervalued right now? Perhaps not so much when compared to its peers or the S&P 500. However, when looking at its five-year average, it’s a whole different argument. GNTX currently trades at 11.1 times operating cash flow; historically, it’s averaging 24.3 times. It’s the same result for P/E, P/S and P/B. Add to this a balance sheet that Thunderstorm Capital’s John Dorfman dubs a “powerhouse,” and we’ve got a stock that’s ready to bust out of its funk despite historically underperforming its auto part peers.
Gentex has no debt and $450 million in cash. Its free cash flow in the TTM is $140 million. Dividends eat up about half of that, leaving $70 million to buy back its stock. GNTX bought back $33.7 million of its shares in 2012 at an average price of $17.10. Today, they are about $3 more expensive. With 143 million shares outstanding, I believe it could repurchase 10% of its shares and still have plenty of cash remaining.
GNTX’s share repurchase program currently authorizes for up to 4 million shares to be bought back. While it’s not a habitual buyer of its stock, I see it buying a car load in 2013.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.