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It's rare for a share to offer a little bit of everything; asset value, an excellent yield, the potential for recovery and some excitement over future growth. It's a combination of these factors that makes Zotefoams (LSE: ZTF.L - news) (LSE: ZTF) look like an excellent long-term investment at today's price.

The company is the world's leading producer of "cross-linked, closed-cell block foams". For the less technically-minded, it's that kind of foamy stuff you see in cricket pads, ice hockey goalie's pads, and swimming vests or boards. But it's also used in healthcare, toys, building and the military. Based in Croydon, Zotefoams also manufactures in Kentucky. It exports around three quarters of its production, mainly into Europe, to manufacturers who then use it in its many different applications.

Hard times

As you can imagine, though, things haven't been going swimmingly well of late. Having said that, the final results for 2008 were excellent given the economic backdrop. Revenue increased to £34.8m from £31.6m the year before, whilst pretax profit increased to £3.9m from £3.7m. The bad news was that sales first two months of 2009 were lower than anticipated and the outlook for the business is more uncertain than it has been for years. This deflated the shares sending them to an all-time low of a smidgeon above 40p.

Since then, they've clawed their way back along with so many other small caps, buoyed by some director buying -- the MD recently spent £13,000 picking up shares at 57p -- and now stand at 55p valuing the company at a shade over £21m.

The latest hard news came with the AGM statement in May which was distinctly middling. It confirmed that trading was difficult, but also revealed cost control measures and a reduction in staff of 20% from the current 250. Despite the tough conditions, Zotefoams is still profitable and cash generative.

Great expectations

But perhaps more importantly for those of us with longer term investing horizons, the company continues to invest in the development of high-performance polymers and sees its growth prospects as "very exciting".

It is looking to deliver future expansion by a combination of organic growth and via partnerships or acquisitions in related product areas. To this end, the company invested $3m a year ago to buy a 30% shareholding in a joint venture licensing a unique microcellular foam technology for extrusion. Zotefoams is also licensed to use this technology in its own business and will commence production this year.

The broker is expecting earnings per share of 4.6p this year, rising to 5.3p next. This hardly makes them cheap. After all, the prospective price-to-earnings ratio of 10.4, though not hugely demanding, is still very much to be proven.

What's the appeal?

But what makes Zotefoams much more appealing as an investment today is its price to book value, its prospective yield, its historic performance during merrier times which should come again, and the potential for future growth.

The company recently coughed up a 3p final divi to add to the 1.5p interim payment. If maintained this represents a very bubbly yield of over 8%. There's been no indication yet that the divi won't be maintained and the final dividend was 1.8 times covered, so it looks a reasonable bet that the yield will be remain very generous for investors today even if it gets trimmed a little. Only time will tell. 

But the downside for investors today looks fairly limited, with net tangible assets of around 75p per share. Looking back, turnover and profitability have been on an upward trend and there seems no reason to presume this won't be continued as the good times roll again, given Zotefoams' cyclical nature. The fact that it remains profitable and cash generative during this most difficult of times is a major comfort.

Shares offering such a combination of value, income and growth potential are few and far between.