LeapFrog (LF)

[rayank]

LF article: "So why am I holding on this stock? The reasons are simple:

1. The company has solid balance sheet and no debt - I can't argue with $120 million in cash (as of 12/31/2012... it probably has more now as it collects on its considerable receivables). I don't like debt for a cyclical stock, and LF is a cyclical stock with no debt (I say it is cyclical because it is highly dependent on key products and product cycles... oh boy, another can of worms).

2. I really do like LF products and truly believe it has tremendous value that is under-appreciated. When I have a baby, I will be a LeapFrog customer, because I believe it makes products that are actually educational and beneficial.

3. Given 2, if the company is able to rebrand itself as an educational solutions company (which is it trying to do now) instead of its current image as a manufacturer of toys with an educational twist, there can be tremendous upside potential and may even reduce the cyclical nature of the company's sales.

4. In response to the possible accusation that I am speculating with point 3, I don't believe I am paying for this built in option. The stock is cheap at ~9x adjusted earnings (after adjusting net income down for tax benefits).

If the company has survived all these terrible years, through all these terrible CEOs, and is still alive and kicking, there must be a secret sauce in there somewhere. I'm long LF."

http://seekingalpha.com/article/1258541-leapfrog-a-critical-view-from-a-long-investor?source=yahoo