Think Big: This Mega-Bear Will End

The companies I named in my last column will soar in the upcoming retracement, plus they've got staying power. Dell (DELL - commentary - Cramer's Take), Boeing (BA - commentary - Cramer's Take), Expedia (EXPE - commentary - Cramer's Take) and Tecumseh Products (TECUA - commentary - Cramer's Take) serve end markets that are not going away, they're loaded with cash, and they are tops in the sectors in which they compete. Here's another idea.

IDT Corp.: A Spectacular Opportunity

Normally, I would never recommend a stock trading below $1 a share. But the current market is light-years away from normal. There are a handful of companies trading at minuscule stock prices that have been mistakenly tossed into the trash heap. IDT Corp. (IDT - commentary - Cramer's Take) is an excellent example. Trading at 63 cents a share, down from $9 a share at the end of 2007, it has net cash of well over $2 a share. The market says the whole company's worth $48 million. Even in the context of a vicious bear market, this stock never should have dropped to anywhere near its current quote.

The core telecom business, with $1.8 billion in annual sales, has undergone an impressive transformation over the last year. The profitability of the telecom business is masked by one-time charges and the closure or sale of unprofitable businesses. Now that the hard work is done, you'll see free cash flow in the current fiscal year (that started Oct. 1) of $20 million.

This is the type of nugget you can only find in a mega-bear market -- a company valued at $48 million that generates $20 million in free cash flow and has $150 million in net cash on the balance sheet.

In addition to the telecom business, IDT owns several businesses in energy and media. Over the years, the company has developed and sold many businesses -- Net2Phone is one of many success stories. While there is tangible evidence that these businesses have considerable value, even if you assume they're worth zero, the stock is still a bargain.

---

Please note that due to factors including low market capitalization and/or insufficient public float, we consider IDT Corp. and Tecumseh Products to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

---

At time of publication, Alsin and/or ACM was long Dell, Tecumseh Products, Boeing and IDT Corp., although holdings can change at any time.

Arne Alsin is the founder and principal of Alsin Capital Management, a California-based investment adviser. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback; click here to send him an email.