Ambassadors Group (EPAX) reports after bell today. I have taken a small position ahead of the report as it is hard to find a cheaper stock than this beaten down equity. The company has suffered since the financial crisis as the poor world economy has dramatically reduced their supply of student travelers. However, given the company's robust balance sheet, generous dividend yield and heavy insider buying I think the shares are worth accumulating.
"Ambassadors Group, Inc an educational company, organizes and promotes travel programs for students and professionals worldwide." (Business description from Yahoo Finance).
Seven reasons EPAX is cheap at $5 a share:
- Almost 100% of the company's market capitalization is represented by the net cash and short term investments on the Ambassador's balance sheet. **Note, some of this represents prepaid travel, but majority is deployable cash**
- A director and Bandera Partners have been heavy buyers of the stock recently. They have added more than 500,000 shares in the last few months.
- The stock yields almost 5% (4.8%).
- Ambassadors is hardly followed by analysts, but Zacks has it listed on its "Strong Buy" list.
- The stock is selling near the bottom of its five year valuation range based on P/B, P/S and P/CF.
- Bandera Partners now owns over 13% of the shares. The company also recently put forth motion to change the rules for the board of directors. If motion passes, the board will no longer be staggered but could be replaced at once. Given this and the large buying by beneficial owners, I believe something might be afoot (Ex, LBO) that could be positive for the share price.
- The stock looks like it has finally bottomed and just crossed its 200 day moving average. The stock was in the 30's prior to financial crisis impacted travel (See Chart)
Disclosure: I am long EPAX.