Why Acme United Deserves a Core Spot in Your Portfolio

Walter C. Johnsen, the Chairman and CEO of Acme United Corporation (ACU – $16.66) made a presentation earlier this week at the Rodman & Renshaw Global Investment Conference in New York City. The conference attracted over 2,000 attendees.

Next to presenting Acme to a broad audience, Mr. Johnsen also met several institutional investors and analysts during one-on-one sessions.

It is an ideal time to attend these events and introduce Acme United to new investors, as the stock has declined somewhat in recent weeks and now trades at very attractive valuations.

At its current stock price, Acme has a book value per share of $15.4, giving it a price/book value ratio of 1.08. Moreover, the Company’s current P/E ratio is 11.05, while its peers are trading with an average P/E ratio of 29.73, almost 170% higher!

In addition, Acme United’s balance sheet is robust as it has more than $51.3 million in working capital and a solid current ratio of 4.14.

And finally, Acme’s financials continue to grow. As a matter of fact, it set a new all-time quarterly sales and earnings record in its second quarter, ended June 30, 2015. The Company’s growth story is supported by a 9 cents quarterly dividend, which at today’s share price is an annual yield of 2.16%. This is more than twice what you make on a regular savings account.

Conference Schedule

Next week, Mr. Johnsen will also present at the B. Riley & Co Conference in New York City and at the Singular Research Conference in Los Angeles, two well attended and respected shows.

Conclusion

Acme United’s stock usually trades between a narrow range. Currently, its 52-week low is $15.99 and its high $20.50. So with a stock price of $16.60 it’s nearing the bottom of that range. This has traditionally been a very good opportunity to acquire shares.

With all its growth opportunities, a significant undervaluation compared with its peers, a strong balance sheet, and an attractive dividend, Acme United deserves a core spot in your portfolio. Buy recommendation.

Smallcaps.us Advice: BuyPrice Target: $36.38Latest Company Report (pdf)
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