Arden's Fresh Air

When you wade through the Wall Street hogwallow as often as we do here at the Fool, you trudge along every day in a heavy set of intellectual hip waders, trying to keep the dung away.

As you can imagine, this not only gets tiresome, but it's not entirely effective. Even when you don't get smeared, that overpowering smell can get to your brain. In response, you take your solace in strange oases, places where sunshine and fresh air blow away the green fog of investor relations as usual.

I got a nice rest in one of those places yesterday, when I reviewed the finances from Arden Group (Nasdaq: ARDNA  ) , a small, California grocery-store operator that has no analyst following it, a two-person executive team, 550-word earnings reports, and quarterly filings that are skinnier than Nicole Richie.

When, for instance, is the last time you ever read this in an earnings release?

"The Company had no potential common shares outstanding during the first quarters of 2005 or 2006, and therefore, basic and diluted net income per common share are the same."

Seriously, that ought to bring a tear to your eye.

To get to the numbers -- click here for a detailed breakdown -- they were as boring as the grocery business. Net revenues dipped by almost 2% to $118 million. (I told you this was a small outfit.) Net income dropped 4.7%, but on a per-share basis, earnings only dropped 1.9%, because this company does shareholder-friendly things like buying back shares with its excess cash.

It also pays a dividend, and has been known to lay bigger, special dividends on investors when it's got too much money in the coffers.

If this kind of outfit doesn't interest you, good. While everyone else is shelling out 60 times earnings for a Whole Foods Market (Nasdaq: WFMI  ) , 70 times earnings for also-ran Wild Oats Markets (Nasdaq: OATS  ) , or slumming with Albertsons (NYSE: AB  ) or Safeway (NYSE: SWY  ) as those chains slug it out with other low-end rivals, Arden just keeps doing its thing in its small California neighborhood and churning out the cash flow.

True, that cash flow can be lumpy -- as a comparison of this quarter to last year's shows. But flow it does, and it should continue. Moreover, by my calculations, it only needs to keep churning out the green growth at about 3% per year to make it worth $100 a share, and I think it can do better than that. In the meantime, I not only get a company selling stuff that's not subject to fads (food), but one that doesn't try to dazzle me with IR dung. This stock's worth holding for peace of mind alone.

Arden Group's under-the-radar size, boring business, and strong cash flow have earned it a spot on the Motley Fool Hidden Gems watch list. To take a free look at companies that have made the cut and become official recommendations, click here .

Seth Jayson likes some bland to go with his spicy meatballs. At the time of publication, he had shares of Arden Group but no positions in any other company mentioned. View his stock holdings and Fool profile here. Whole Foods Market is a Motley Fool Stock Advisor recommendation. Fool rules are here.