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No. of Recommendations: 11
CIX's main biz is making locks (mechanic, electronic). pretty mundane, moderate growth, but a very nice niche business which earns surprisingly high ROIC. Even during the 08 downturn, when revenue declined 30% from $80m to $60m, op margin only declined 200bps from 18% to 16%. Since then, revenue has more than exceeded prior peak to $90m in '14, with EBIT more than doubled since bottom. They grew revenue double digit in '14, thanks to strong demand in government and transport customers.

stock trades at $11. They should have $3.6/share in cash year end '14, and should earn over 70c fully taxed, vs. 50c in '13. FCF is a bit less than Net income, but does not vary too much. So one is paying 9x '14 EPS ex cash. Using Martian's favorite exercise, flat earnings for next 2 years will get us a balance sheet of 46% of mkt cap in cash by year end '16.

What's interesting to me is this is a small company in the conglomerate of Harrold Simmons, a very smart investor who passed away in late '13. the family still owns 90% of the company. there is no conf call, so nobody knows their intention, although they have sold businesses from time to time. this is actually a space with lots of deals. Assa Abloy, a European roll-up (darling amongst investors for many years) trade at 15x EV/EBIT while CIX's lock biz is trading at 4x EBIT (pre corporate expenses, which is mostly salary for top mgmt and public company expenses). Assa is quite acquisitive and routinely pays double digit multiples on EBIT. So if the company is ever put on the block, it could well be worth $18-20 conservatively.
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