When Zeke Ashton brought me his idea for Stocks 2004, I thought that the company's business -- retreading tires -- was, at best, bizarre. Who knew there was a business to be had in those "gators" you see lying on the highways? Well, I knew, but my only experience in this area of commerce hadn't inspired much confidence.

Many years ago, a friend of mine called me up with one of his "hot tips." They were almost never hot, in fact, and they usually turned out to be total disasters. Don't see companies like Kellstrom, Hvide, or even -- gulp! --Lernout & Hauspie listed anymore? Me neither, and my buddy recommended them all. Fortunately, I was pretty clear on the fact that while I really liked this guy, I tended not to put faith in his business analysis.

One day about eight years ago, he came to me with a company that purported to do something that was too weird for words. Garb Oil & Power (OTC BB: GARB) was a development-stage company that had a technology that would chew up discarded tires and convert them into energy sources for power. "Just think of all those shredded tires you see on the highway," my buddy waxed rhapsodic. "They're money!" Garb was "development stage" then, and it is development stage now -- though it does beat the other companies my friend suggested simply by dint of still being in existence.

Ah, but I digress -- we're not talking about Garb Oil; we're discussing another company operating in tire treads. Peter Lynch often says that some of his favorite investments are great companies in horrible businesses, and this one fits the bill. In fact, it's a company that Lynch did talk about glowingly, more than a decade ago in Beating the Street.

Commercial vehicle tires are a cutthroat business -- note the struggles at Goodyear Tire (NYSE:GT) and Bridgestone (Pink Sheets: BRDCY), over the last few years, for example. But this particular company has put itself in quite a niche: Of the 32 million commercial tires sold in the U.S. last year, about half were recycled. Retreading tires makes them as good as new, at a substantial savings to buying brand-new ones.

What convinced me instantly that Zeke hadn't come up with some other pie-in-the-sky idea, beyond the fact that I know Zeke's conservatism, was that it provides something in spades that a Garb has never done: massive amounts of free cash flow, with nearly $0.12 of every dollar in revenue ending up as free, unencumbered cash. A fair portion of this cash is returned to shareholders in the form of a healthy dividend, better than 3.2% at present valuation. Best of all, this company elicits the institutional equivalent of crickets chirping: It has almost no analyst coverage. Zeke's thesis rests upon the fact that this area has not been combed over by value-seeking investors.

Stocks 2004 is available now.

Bill Mann was editor of Stocks 2004. He owns none of the companies mentioned in this article. No, not even Garb.