• Friedman Industries (FRD) is one of those rare occurrences - a company that is selling at near net asset value. For the quarter ending 06/09, the company reported current assets of $43.9 million and total liabilities of $5.6 million.
• Inventory to Sales was 9.29% at the end of FY09. For the trailing 12 months, the Inventory to Sales ratio increased to 10.41%
• The EPS growth rate for the trailing 12 months is 38.2%. The three and five year growth rates are 30.2% and 43.5% respectively.
• FRD has a current ratio of 9.5 and no long term debt. This indicates that the company is financially secure. It is also indicative of a company that may not be putting its assets to the best use. Certainly, the company has room to employ some debt.
• The company has a Price/Sales ratio of 0.2 based on trailing 12 month sales. This is very favorable.

VALUATION METRICS

Friedman Industries Inc. (FRD) is engaged in steel processing, pipe manufacturing and processing, as well as steel and pipe distribution. This is a sector that has suffered a double whammy of declining demand and a whipsawing spot market steel prices. Needless to say, the company business and the stock price has suffered too.

This is a small company in the sector and probably has one of the strongest balance sheets. It appears to be well positioned to prosper when the demand for its products improves. The catalyst here being a generally improving economy as well as increased infrastructure spending in the next two years as part of the stimulus.

Free cash flow (FCF) yield can is an often overlooked financial metric in equity valuation. The cash generated from operations after capital expenditures is what effectively belongs to shareholders in the form of dividends or retained earnings. That’s why many fundamental value analysts use FCF yield as an important gauge of the ongoing financial health of a company. If cash is king, then free cash flow is the path to royalty.

Here are ten stocks with high double digit last twelve months free cash flow yields (actually greater than 12.5% FCF yield when considering an anticipated drop of no less than 20% during a weaker 2009) with price to tangible book values and trailing P/E ratios less than or equal to the average values of the Russell 2000 small cap index.

Friedman Industries, Inc. (FRD) is a microcap value stock engaged in steel and pipe processing and distribution. The company divides its products into two main groups: coil and tubular products. FRD sells coil products primarily to steel distributors and customers fabricating steel products, such as storage tanks, steel buildings, farm machinery and equipment, construction equipment or transportation equipment, located primarily in the midwestern, southwestern and southeastern sections of the United States. The company's principal customers for tubular products are steel and pipe distributors, piling contractors and U.S. Steel Tubular Products, Inc. (USS).

The company comes with a great set of fundamentals, trading at a P/E of 2.5 and a price/book of 0.7 with a current ratio of 3.9 and very little debt. The company has been steadily growing earnings and sales over the past few years, and has paid a dividend for the past 10 years (currently 3.5% yield).

What if you don't want to spend your retirement managing and worrying about your portfolio? Put it on Auto Pilot, specifically on a Dividend Investing Auto Pilot. Dividends from a quality, well-diversified portfolio are much more predictable than capital gains and best of all, they are passive. You don't have to do anything, they just show up in your brokerage account each quarter. Inflation? Not to worry, the good companies routinely raise their dividends well in excess of the inflation rate.

Below are several select companies that recently decided to help their shareholders beat inflation by boosting their cash dividends:

• Verizon (VZ) Boosts Qtr. Dividend 7% to $0.46/Share (5.24% yield)
  
• Friedman Industries (FRD) Raises Qtr. Dividend 50% to $0.12/Share (5.99% yield)
  
• Supertel Hospitality (SPPR) Increases Qtr. Dividend 2% to $0.1275/Share (11.11% yield)
• Tyco International (TYC) Boosts Qtr. Dividend 33% to $0.20/Share (1.98% yield)
• Kraft Foods (KFT) Increases Quarterly Dividend by 7.4% to $0.29/Share (3.54% yield)

Last month I wrote about the pricing power that many US based steel firms had. I also posted how the weak US dollar and low inventory levels would lead to above average returns for my steel focus list. Here are those steel firms and their price increases since May 2:

• Gerdau Ameristeel (GNA): 23%
• Steel Dynamics (STLD): 20%
• Reliance Steel (RS): 23%
• Commercial Metals (CMC): 28%
• Insteel Industries (IIIN):  43%
• Universal Stainless (USAP): 9%

That's an average return of over 24%, while the S&P is down over 5% over the same time period. With an annualized return of 144%, one would be a pig not to some take profits; I have sold my position in GNA, but have added to my USAP position.