Here are a couple of other things that I like about this...

Here are a couple of other things that I like about this potential cyclical recovery story. I like to look at the ratio of EBIT to gross profit. I think this ratio has sometimes been referred to as the "safety margin" (not to be confused with Ben Graham's well known "margin of safety").

EBIT/GP, or EBIT-margin to gross-margin, is important because it tells us how much revenues could fall by, before the business is breaking even (without addressing its fixed costs). In FY2015, this ratio was a whopping 75%. Sinced FY2008 it has never been less than 72%.

Clearly these were based on buoyant revenues (though FY2015 can hardly be considered boom times). For FY2016, I expect revenues to drop by about 30% (they had already dropped by 20% in FY2015, compared to pcp). Without any reduction in costs, this ratio will be reduce to 60%.

Now tell me a business that can sustain a 60% fall in revenues, without cutting costs, before it sees red? But the reality is, that MND's fixed costs have been coming down substantially since FY2013.

This business looks like it could survive a nuclear winter.

But wait, there's more! The business has enough excess cash, to cover its fixed costs, 8 times over! All seems too good to be true...