I would like to take this opportunity to link a blog post by Mark McQueen.
Mark has identified a handful of the Companies that intersect with my view of the top 30 and the top 80 stocks on the Toronto Stock Exchanges. Typically, the top 30 are companies with cashflow, excess cash and projected earnings growth (even in these markets). The remaining stocks are not cashflowing but are close and have oodles of cash to execute plans (even in these markets).
Mark is right. There are dozens of small cap and microcap companies with great assets, great technology, and great skills that are essentially valued at next to nothing. Another enigma is Grey Island Systems (GIS.V), a profitable telematics operation with no debt that, depending on the day, trades near or below cash value.
Smart CEOs with cash and a little moxy should be making some buy versus build decisions and bulk up as the world economy exits from this recession as a very different animal. Really ballsy CEOs may be seen divesting resources from R&D and investing resources in M&A. Why build something when you can buy it at a fraction of the expense? On the flip side, there are probably over 100 tech CEOs who should be working with their Boards and key shareholders right now to repair operations and maximize asset value for roll-ups and mergers. See my previous post.
I do not own shares in Grey Island Systems, nor do I receive compensation from the Company in any way.