Jeff Borack submits:Life Partners Holdings Inc. (LPHI) was recently the “idea of the week” on Sumzero.com, a website I like to use for networking and to find new investment ideas. I decided to take a look at LPHI, and I was pleasantly surprised to find that the business model resembles Deckers (DECK), a business I love. They both operate with zero debt and have solid EBIT margins, meaning the bottom line shouldn’t be too volatile and there’s almost zero bankruptcy risk. But more importantly, both companies are growing at a spectacular rate despite negligible reinvestment. They take the money they earn each year and either pay a dividend, repurchase shares, or put cash in the bank.LPHI’s capital expenditure in the LTM was $400k, compared to cash flow from operations of $26.5 million and net income of $30.5 million. This is typical. However, they have managed to grow revenue at a CAGR of 56.2% since 2002, and EPS at a CAGR of 56.0% since 2003. Is this sustainable? Absolutely not. Is LPHI most likely undervalued at 10.6x earnings with a 5% dividend yield? I think so. Complete Story »
A Physical Exam for Life Partners
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