There has been a lot of talk regarding American Software (AMSWA) on the Yahoo Message boards and in the MF Caps; everyone seems to think it's undervalued and a great "asset play." From further analysis, it is far from it. Here is the math:

AMSWA owns 88% of Logility (LGTY) = $165.8 mln
Cash on the books is $75.6 mln, but $30 mln is from LGTY, so net of $45.6 mln gives a value of $211.4 mln for AMSWA so far.

A few weeks ago a lawsuit against the company was dismissed; it roughly saves the company $200k a quarter. This won't have a significant effect on Q3 earnings, but it's roughly $0.10 per diluted share a year afterwards.

Not too big, but when the stock is trading for only $3.20, that is significant. There has not been much significant news besides that, except that price has been slowly rising and there has been a significant pickup in volume since the lawsuit was dropped.

Forward Industries (FORD) - Forward Industries designs, markets and distributes carrying cases for portable electronics such as cell phones, cameras and other consumer electronic products. The majority of their business is cell phone cases/accessories and cases/accessories for diabetics. They have had a recent drop off in sales due to the change of strategy at Nokia (NOK) and Motorola (MOT) to not package cell phone accessories with their cell phones. They have $2.67 of cash per share, they are currently trading at $2.80. Insiders own 10% of the company. There has been recent insider buying.

FORD 1-yr chart

It also has the Film Production Group which produces original adult themed movies and is a sales agency that helps independent filmmakers license their product; it was acquired in February of 2006. Its third segment is the Internet Group which distributes adult content through the internet.

It recently had earnings in early June and missed analyst estimates, sending the stock down. The big contributor to the earnings drop was an increase of 43% in operating expenses. Organic revenue growth, not taking into account the Film Production Group acquisition, was negative compared to the same quarter last year.

Purchasing food from the domestic distribution centers is voluntary, but almost all the franchises purchase food from them anyway. This helps create cohesiveness.

Usually there is some kind of negative news or just a negative cloud surrounding a stock to make it a Magic Formula Stock, but Domino’s is unique in that it just completed a recapitalization plan that included a $13.50 special dividend. Well, the special dividend was just completed, the stock price dropped and now it’s just trading for $18.73 compared to over $30 per share before the dividend.

The reason it licenses and doesn't produce on its own is because its mid-priced brands are better suited for larger retailers with economies of scale.

There is an opportunity in this stock because it recently missed analyst earnings expectations and the stock price dropped 25%. A big chunk of the earnings drop can be attributed to a revenue drop of 9% compared to the same quarter last year. Most of the revenue drop can be blamed on the sale of the Mossimo agreement last year, which cut the royalty stream, and the drop in sales of Cherokee products in Target (TGT) stores.

Industry

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Motorola is the famous manufacturer of wireless products such as cell phones and network products. It recently has had issues with earnings due to struggles in the mobile device business. Motorola has had trouble replicating the success of its Razr phones and that has led to bad quarterly results. It also had a change in upper management with David Devonshire being replaced by Thomas J. Meredith as the CFO. Carl Icahn has also dabbled with Motorola. There are a lot of famous investors on the long side of Motorola such as Bill Miller, George Soros, Edward Lampert and David Dreman.

The Finish Line comparable store net sales continue to decrease and decreased 4.1% compared to the same quarter last year. Net sales decreased 0.2% year over year.

The recent stock downfall was due to a 1st quarter that did not reach analyst expectations. Analysts expected $0.32 per share but it earned only $0.25 per share. It was still an increase compared to the same time period last year, but that was only because of the smaller number of shares outstanding; net income went down. The increased expenses can mostly be attributed to a rise in sales and marketing expenses and an increase in the income tax rate. Its Canadian and European operations, which were just recently launched, are still experiencing losses.

It's also currently experiencing downward price pressure on the stock due to its program to make cash payments to people who failed to convert their shares of Travelzoo.com Corporation to Travelzoo Inc., due to the mergers of different Travelzoo companies. There is no estimate of how much this program will cost the company.

The bed’s two sides adjust separately from each other which increases each partner’s experience. Its beds are clinically proven to provide people who sleep on its mattresses with better sleep than people who sleep on the traditional innerspring mattresses.

Select Comfort is a Minnesota based corporation which was founded in 1987. It was ranked as the 6th largest mattress manufacturer in 2005 according to Furniture/Today. At that point, it held a 5% market share of industry revenue and a 2% market share of industry units.

It's also involved in the imaging business, which consists of developing products which “allow imaging or analytical detection in extreme low light situations.” The imaging group also works with the military. For its imaging department, most of its revenues have come from R&D contracts with the U.S. government. Its stock has recently fallen due to revised downward earnings guidance for the upcoming quarter.

Intevac has great growth plans. The internet and the digitalization mega trends taking place will benefit it. First, the hard drive market is projected to grow at a brisk pace due to new products that require higher storage capacity. TrendFocus projects 14.4% annual growth in hard drive shipments through 2010.

Guidance, for the 4th quarter ending July 31st, 2007, blew away estimates (see 2nd table, below).

Gross margin was still low due to the lower-margin VGA products. It still has a very solid balance sheet with over $305 million in cash and cash equivalents and short-term investments. Starting with the 2nd quarter in the 2007 fiscal year, which ended on 10/31/06, it ramped up inventory production.

Promotion – Helps clients reach promotional goals with their target customer through event and field marketing, sampling, onsite promotions, and customer acquisition programs.
Media – Provides advertising solutions for young adults, both online and offline, through such sources as Display Media Boards, websites, books and print sources.
Placement – Provides placement solutions for targeted customers in college, multi-cultural and military markets.

It mostly targets 10-24 year olds, but it does reach consumers outside of that group.

Margins looked good, no signs of them decreasing.

The company also authorized a 23 million shares repurchase program; it already had 4.2 million shares outstanding in its current repurchase program. Its policy on share repurchases was to offset dilution related to stock options. Could this mean that its growth is slowing down and it has to make up for it in other ways?

Finish Line – sells brand name footwear and soft goods, currently 693 stores
Man Alive – street fashion retailer, currently 87 open stores
Paiva – new store concept for active women, currently 15 open stores

While Man Alive and Paiva are recent growth strategies, the Finish Line stores have been open for business since 1976. Its biggest supplier is Nike (NKE), which accounted for over 50% of its total purchases the last 2 years. It has had some recent struggles. For Fiscal year 2007, its earnings were $.68 per diluted share compared to $1.23 per diluted share in Fiscal year 2006. This was due to a 5.7% decline in comparable store net sales.

It has two main product strategies; one is its “classic” line of sneakers, which were the company’s first product. They have longer product cycles than normal sneakers and long product cycles reduce the markdowns on a sneaker. This makes it more attractive to retailers. K-Swiss keeps a large inventory of classics in its warehouse.

Its other product strategy is based on current consumer fashion trends. It does not keep a large inventory for these. Its goal is to take advantage of current fashion trends in the marketplace while minimizing risk. K-Swiss’ primary goal is to become the “retailers’ most profitable vendor,” meaning that through longer product cycle, it can maximize the effect of market expenditures and minimize retailers’ markdowns.

Industry
It operates in the athletic footwear industry, which is very competitive. Its biggest competitors are Nike (NKE) and Adidas (ADDYY.PK). Investment gurus who are bullish on Nike, and by extension the footwear industry, include Warren Buffett, Bill Miller, and Glenn Greenberg.

There are some issues with the economics though; people are worried consumers will slow their spending, being overextended in debt and with gas prices on the rise. To some degree, however, a recession cannot destroy the footwear industry because it meets one of the 3 basic needs of people, clothing.

Some of the lawyer services that are provided for the standard fee are: “standard plan benefits include preventive legal services, motor vehicle legal defense services, trial defense services, IRS audit services and a 25% discount off legal services not specifically covered by the Membership.”

Industry
Its main competition consists of Hyatt Legal Plans, ARAG[R] North America, and National Legal Plan and Legal Services Plan of America, but most of its competition markets to bigger employers. According to Pre-Paid, its target market consists of around 100 million households, and it currently has 1.5 million households as subscribers.

It also operates AE.com which sells its American Eagle and aerie clothing lines. AE.com has also been a major growth driver and in 2006, sales at AE.com rose 48%.

American Eagle's retail stores have been in existence since 1977. It has been growing at a very brisk pace and its revenue has grown from $406 million in 1998 to almost $2.8 billion in 2006.

Liggett Group – manufactures and sells cigarettes.
Vector Tobacco Inc. – specializes in developing low-risk cigarettes like nicotine-free QUEST.
New Valley LLC – real estate business.

The Liggett Group primarily specializes in discount cigarettes. During 2005 and 2006 all of its sales were of the discount variety. According to the Management Science Associates, its market share of the overall discount cigarette industry has grown from 7.4% in 2004, 7.5% in 2005 to 8.7% in 2006. Its best seller is the Liggett Select brand. All of its sales are in the United States, and it has no foreign operations.