If there's a recession going on, Dolby Labs
Reporting earnings Wednesday, this Motley Fool Stock Advisor recommendation demonstrated the twin magical feats of pulling 20% sales growth out of a hat, then transmogrifying that figure into 62% earnings growth. All while riding a unicycle, drinking a glass of water, and singing "I'm a Yankee Doodle Dandy" in Portuguese.
I may have taken a few liberties there, but the quarter was pretty magical. We're mired in one of the nastiest recessions in memory, as tech giants like Microsoft
As bad as things look across the rest of the investing world, Dolby still thinks it can rake in between $630 million and $700 million in revenue this year. Dolby expects to generate about a 31% net profit margin thereon (way better than rivals Philips
Pump up the volume
Sorry. Am I waking the children? Cheering too loudly over the news? Well, I'd love to tone down my enthusiasm, but I can't. Because on top of all of the above, I just cannot help but point out that Dolby is cheap, cheap, cheap.
Over the past four reported quarters, Dolby generated $272.5 million in free cash flow. Thanks to its nice cash position ($583.5 million) and paltry debt ($8.4 million), Dolby is selling for an enterprise value that's barely 10 times its free cash flow.
A business, I remind you, that analysts expects to grow at an annual rate of 14% for the next five years. Not to put too fine a point on this, Fools, but Dolby ain't just a bargain. It's a dirt-cheap dream stock. And if it stays this way for the 10 days I must cool my heels while The Motley Fool's disclosure policy runs its course, I Fool-y intend to buy me some Dolby.
The Motley Fool has a disclosure policy.