National Presto Industries
(18 pages of text)
A recent business graduate decided to contact her former classmates from her value investing course. She emailed them with a proposal to re-evaluate the company they had valued for their final project, National Presto Industries (Presto). Presto was a diversified company operating in three different industries: housewares/small appliances, absorbent products, and defense. The price had dropped about 25 per cent and perhaps it was time to take it off of the group’s “watch list,” as it might now be undervalued and worth purchasing. Presto was initially brought to the group’s attention through a screening process that identified Presto as having a low price to earning value, a high dividend yield, and a small market capitalization. It was unusual in that it was a company that was over 100 years old and operated in stable and unglamorous segments, yet was still considered a growth company. If it was determined that Presto was a good buy, the team also wanted to establish an exit price, but due to a tight concentration of shareholders and low average daily trading volume, the team wondered how this low liquidity would impact the stock’s share price.
United States, Large, 2011
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