Cherokee Inc. (CHKE)

Cherokee has some avenues for growth, as well. The company's deal with UK retailer Tesco has been advantageous, as Tesco has moved the brand into Eastern Europe, Asia (including China), and parts of Africa. The company also has a deal with Zellers in Canada and potential deals in China for the Sideout brand and Mexico for the Cherokee brand.

There is 24 million in cash on the balance sheet, and no debt. Free cash flow margin has averaged an outstanding 50% or higher for the last 5 years. The company doesn't horde this cash... it pays out 65% of it, to the tune of a 9% dividend yield. This alone makes Cherokee an attractive investment candidate.

Moreover, the management seems like a good bet too. Robert Margolis is CEO, and has been with the company since it's founding in 1981. He owns a healthy 12% of the shares, which aligns him with shareholder interests. However, there are some governance issues. Margolis has final say over any additions or subtractions to the Board of Directors. His base pay cannot be cut. The proxy goes so far as to say that his employment agreement must compensate him for any "inconvenience". Clearly, corporate governance could be better, but management isn't a major concern here.

Cherokee has some avenues for growth, as well. The company's deal with UK retailer Tesco has been advantageous, as Tesco has moved the brand into Eastern Europe, Asia (including China), and parts of Africa. The company also has a deal with Zellers in Canada and potential deals in China for the Sideout brand and Mexico for the Cherokee brand.

There is 24 million in cash on the balance sheet, and no debt. Free cash flow margin has averaged an outstanding 50% or higher for the last 5 years. The company doesn't horde this cash... it pays out 65% of it, to the tune of a 9% dividend yield. This alone makes Cherokee an attractive investment candidate.

Moreover, the management seems like a good bet too. Robert Margolis is CEO, and has been with the company since it's founding in 1981. He owns a healthy 12% of the shares, which aligns him with shareholder interests. However, there are some governance issues. Margolis has final say over any additions or subtractions to the Board of Directors. His base pay cannot be cut. The proxy goes so far as to say that his employment agreement must compensate him for any "inconvenience". Clearly, corporate governance could be better, but management isn't a major concern here.

this remarkable little company has only 18 full time employees, less owned property then most small families, and yet collected over 75 million dollars in revenue last year and turned nearly 53% of those revenues in free cash for its stockholders! Clearly this is one exceptional business - and it could be on sale soon.