OK, I'll say it if no one else will. Even with Monday's 18% run, arising from a blockbuster third-quarter earnings report, Marvel Entertainment (NYSE:MVL) is a screaming buy. Period.

Here's why:

Components of Adjusted Cash From Operations

Trailing 12 Months*

2006*

2005*

2004*

Reported net income

$123,895

$58,704

$102,819

$124,877

Depreciation and amortization

$9,758

$14,322

$4,534

$3,783

Amortization of financing costs

$4,980

$4,980

$1,660

$3,446

Deferred revenue

($17,118)

$140,087

($6,093)

($6,063)

Film production costs

($196,629)

($15,055)

$0

$0

Borrowings from film facility

$211,678

$7,400

$25,800

$0

Capital expenditures

($4,192)

($16,286)

($4,289)

($3,586)

Adjusted Operating Cash Flow

$132,372

$194,152

$124,431

$122,457

*Numbers in thousands.
Sources: Marvel press releases, SEC filings.

Yeah, I know, $132 million is less than $194 million. But who cares? Marvel had managed just $25.3 million in trailing adjusted cash from operations through its first quarter.

In other words, Marvel is raking in moola like Venom after a string of Lower Manhattan bank robberies. And not a single penny of that cash flow is from self-produced movies.

Oh, Mickey, you're so fine -- but so is Spidey
What this means is that Marvel has a massive licensing business that should continue to thrive, even as Marvel Studios cranks out Iron Man next May, followed by The Incredible Hulk in June.

How massive is it? Ask the editors at LICENSE magazine. According to this article (downloads a PDF file), Marvel is the world's sixth-most valuable licensing brand, accounting for an estimated $4.8 billion in retail sales. Disney (NYSE:DIS), Viacom (NYSE:VIA), and Phillips-Van Heusen are among the handful of brands to account for more.

No one should be surprised, then, that hundreds of companies are leaning on Spidey to earn them more. Crocs (NASDAQ:CROX) is putting Marvel characters on its signature clogs, for example. And the Al Ahli Group is spending $1 billion to welcome Captain America to Dubai.

But, in Q3, it was Spidey who dazzled investors. Licensing revenue from Marvel's Spider-Man joint venture with Sony (NYSE:SNE) nearly touched $100 million through the first nine months of the year, up from $3.5 million during the same period in 2006.

Margins also improved by double digits across the board, thanks in part to another lucrative licensing deal -- this one with Hasbro (NYSE:HAS), which has committed to spending more than $200 million to make toys out of Marvel characters.

Take another look at those numbers
Surely, bears will point out that even with its rich licensing business, Marvel faces a huge hurdle with self-produced films. They're not entirely wrong. The comic-book king has already borrowed more than $200 million to produce Iron Man and The Incredible Hulk.

If neither film makes money, Marvel could lose the movie rights to both characters and eight others. But I just don't see that happening. I've done the math.

According to this presentation (downloads a big PDF file), a self-produced Marvel film that costs $130 million to make and that earns $150 million at the domestic box office would produce $62 million in operating profit.

If that's true, then perceived busts Fantastic Four: Rise of the Silver Surfer, produced by News Corp.'s (NYSE:NWS) 20th Century Fox, and The Hulk, produced by Universal, would have earned more than $50 million each for Marvel as self-produced films.

My point? Maybe Marvel's movie business isn't as risky as the Street thinks.

And if it is? So what? Marvel today trades for roughly 16.8 times is adjusted cash from operations, or about in line with historic norms. What that means is investors buying today are getting the new Marvel Studios business for zero. Nada. Zilch.

You and I both know that's a screaming bargain. Will you have the guts to take Mr. Market up on it?