serious upside, page-27

Looks like we're getting some decent buying depth, for a change. That's encouraging.

It still baffles me sometimes how this stock can be so cheap. Just looking at the numbers since the GFC (when the retail recession began) up to now - that is, between 2009 and 2012, they've:

* paid out around $6 million in dividends

* paid off debt of around $3 million

* and yet still manages to increase their cash balance by about $6 million

So they have generated around $15 million in distributable cash over the 4 years. That's around $ 4 million a year.

(note: numbers are only rough estimates - I do find it easier to work with that way ... lol)

Taking that same rate, in 4 years they'll have generated another $ 16 million cash. Coupled with their current $9 million net cash balance, that means you'll be effectively free carried within 4 years, when their net cash holdings exceed their market cap.

And the kicker for me in all of this: they are making this sort of cash in the worst retail recession in living memory!

If they make $4m a year on average during some of the toughest times in retail history, then when the retail recession ends, the only way is up.

To be honest, as far as valuation goes, I would not be surprised if the company's market value rises to about $70 to $80 million within 4 years. That would put it at about 12 times the $4m a year earnings, less its expected net cash position. If earnings recover to even half what they were pre-GFC, expect the market cap to be a lot higher.

In the meantime, as NBL's share registry sees the arrival of investors playing the recovery story, while the pessimistic exit their holdings, a gradual rise in the share price should be forthcoming.

Should be a very interesting few years ahead I think!