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As a somewhat cautious investor, I use NAIC's method of rating a company. The resulting SSG (the chart, etc.) tended to show a company that was not accelerating earnings out of a slump yet. However, sales are leveling to improving out of a downturn. This is a necessary first step to improving earnings. The S&P section of E-Trade has an interesting article on KDN this week. That's what piqued my interest. The article noted the settlement of a helicopter accident lawsuit and the low relevance of a remaining shareholder lawsuit from KDN's spinoff. These two items relieve pressure on the bottom line. The EPS were killed due to the 'copter settlement last quarter. Without that kind of one time charge, the inherent margin this company works with will pull the EPS up sharply (in theory).

That's my take on it anyway. This could be an opportunity to catch a wave before many people notice it. Or it could be a money sink if the remaining lawsuit hits hard and/or a true recession hits. 50% of their production is tied up in mfg. for heavy machinery. That's definitely recession sensitive.

There are other questions that should be asked, I'm sure. That's just what is on the top of my mind for now.

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