Mark Perkins sends: Educational Development (EDUC) is one of the most interesting small-caps I’ve come across recently. They publish children’s books to schools, libraries, bookstores, toy stores, specialty stores, museums and other retail outlets. Libraries also happen to be popular during recessions.

The company is shareholder friendly, as they pay out most of their consistent profits in dividends, and have grown the dividend consistently. The balance sheet is great, and their cash position is growing every year against no long-term debt. This clean a business model is hard to find in a company so cheap. It generates double digit returns on equity - currently 14% - without using leverage. The current dividend yield is 10% on $4/share. Revenue is growing recently, up 2% for the last quarter year-over-year, though it has been pretty flat over the past. This slow revenue growth is actually one of the only flaws I could find with the company, although I think it is mostly because of competition with other publishers.

This last quarter wasn’t bad. The company grew internet sales 32% and school and library sales by 11%. Publishing revenue was up 8% year-over-year, with national chains revenue up 19%. They said home sales (down 15%) and direct sales (down 24%) were down because they were just replaced with internet sales.

This little $15 million dollar company spit off $2.5 million in cash flow from operations and $2.3 million in FCF. It’s trading for just 6x FCF and 7x trailing EPS. Net current asset value is $3.48 per share, meaning it is practically selling close to a rough liquidation value. Interestingly, the stock doubled and revenue grew 17% during the last recession in 2001 and 2002. A company that generates consistent positive free cash flow and large dividend payouts for around net working capital is very attractive and about impossible to come by.

Here is a look at some other recent net quick assets plays.

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Disclosure: No position.