I am in the process of starting my due diligence on a new name. On a cursory glance, the company sports a solid balance sheet, no debt and very nice valuation ratios. It has also grown its sales and earnings consistently even through this recession and the management appears to be very shareholder friendly.

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The company is National Presto Industries (NYSE: NPK). Hat tip to @moderngraham for uncovering this. While with traditional strict Grahamian methods, one would give this company a pass, as Buffett and Greenwald contend, you need to also look at the companies franchise value (sometimes referred to as a moat, a term I happen to dislike, but that is my own personal preference). The company sports greater than 500 million in market capitalization with annual revenues touching $500 million. Its price to book ratio is close to 2 and this is where I have some concerns. But the return on equity of 18% is pretty attractive. Fortunately, not many analysts cover this stock.

And the company has a history of returning substantial money to the shareholders in form of dividends.

More on this later. In the meantime, if you have any thoughts on NPK, feel free to post it as a comment or in the forums.

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