Glisten - 61.5p At the moment debt is being frowned upon by the market and even very solid companies are seeing their valuations being depressed if they have significant levels of borrowings.

This is clearly one factor which has led to the collapse in Harewood-based Glisten’s share price.

The company has recently released results for the six months ended December 31, 2008, and is understandably frustrated by the value the market is placing on it.

Glisten is an impulse snack and confectionery group which was only founded in 2002.

Since that time it has grown rapidly through acquisitions, with annual sales consistently growing at an impressive rate.

The acquisitions have been sensible but have meant that net debt had risen to £27.38m at the end of 2008.

A further £1.25m of deferred consideration is due in October.

However, the business is highly cash generative and it is anticipated that debt levels will be reduced in the coming months.

There are no suggestions that the company is struggling to manage its debt and although the trading environment is far from ideal, forecasts suggest that pretax profit for the current year could be as high as £6m.

That figure makes the current market capitalisation of £8.6m look exceptionally low and leaves the shares trading at a multiple of just two times prospective earnings.

No doubt the depressed valuation placed on Glisten is a combination of fears that the company’s financial performance could slip and the general lack of interest in investing in smaller companies.

Fundamentally, Glisten shares look cheap and the commentary accompanying the latest set of interim results implies that the company itself believes that they should be trading at a much higher level.

The interim dividend, which had been 1.1p in 2007, was scrapped and although that is not pleasing news for income seekers a high yield has never been a feature of the shares.

On balance, it seems that shares in Glisten are very much unloved and although there are no guarantees that the price will rebound, it was over 400p a couple of years ago and this remains a business with prospects for growth.

Given the current information available the shares look to represent the type of long term value which only emerges in a beaten down market such as the one we are currently in.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.