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Kirkland's Inc (ticker: KIRK), a specialty home decor retailer, represents the exact type of a company a private equity or LBO fund would be interested in acquiring.

Kirkland's Inc. is currently selling near its three year low at $9.07, yet the stock is seeing huge insider/institutional buying (almost $3.2 mn worth) during the last two months.. Endownment Capital of Delaware has quietly been buying large amount of Kirk stock during, even as the share price has been falling.

Why?

KIrk is exactly the type of company that LBO funds, and private equity funds are looking for, a niche retail business, with a strong return on capital 11.6%,  a low valuation (Enterprise Value to trailing 12month cash flow ratio of 5.6), and a growing top line (a 9% historical revenue growth rate )

Furthermore KIRK is underfollowed by wall street banks, and currenty not one analyst who covers the stock has a buy rating on the company.

Source: Is Kirkland's a Takeover target?