GPIC - Gaming Partners International Corporation ( Nasdaq : GPIC)


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1. Gaming Partners
Business: Casino game chips, tables, equipment
Market Capitalization: $54 million
P/E ratio: 10.3

Gaming Partners (Nasdaq: GPIC : 7.1, -0.02) sells game equipment to casinos across the globe, such as gaming chips used at blackjack, poker and baccarat tables; as well as playing cards, gaming tables and furniture. It also sells roulette wheels and dice. Last year, it reported $60 million in total sales, with just more than half stemming from the United States.

The majority of the company's products are certainly mundane, but its sales are stable and highly profitable. Last year, it generated $7.7 million in free cash flow off the $60 million in sales, representing a profitmargin of almost 13%. This is much more than it needs to maintain and grow the company. As a result, cash has accumulated on the balance sheet, which, as of the end June, stood at $9.8 million.

Given the current market cap of $54 million, backing out the cash means investors are placing a value on Gaming Partner's operations of only $27 million, or only 3.5 times free cash flow -- an incredibly low multiple for such a consistent business.