Top Rational Formula Stocks 6/13/25 Introducing Butler National BUKS
Each week, I share the top-ranked companies from my Rational Formula ranking system. It’s inspired by the logic behind Greenblatt’s Magic Formula, but built with far greater depth, evaluating companies across 96 factors. The system looks for accelerating fundamentals, efficient capital allocation, expanding margins, and reasonable valuations, with a focus on consistency and improvement across multiple time frames. The goal is to surface high-probability opportunities before they attract broader attention. I also highlight one company each week, sometimes as a deep dive, sometimes just an introduction. That write-up appears below the rankings.
Alphabetized Company List for 6/13/25
(All market caps in millions, converted to CAD where applicable)
1. Acorn Energy, Inc. — ACFN:USA — $44.4M USD
2. Astec Industries, Inc. — ASTE:USA — $939.6M USD
3. Aveanna Healthcare Holdings, Inc. — AVAH:USA — $991.1M USD
4. BK Technologies Corp. — BKTI:USA — $153.6M USD
5. Burnham Holdings, Inc. — BURCA:USA — $108.1M USD
6. Butler National Corp. — BUKS:USA — $103.4M USD
7. CareRx Corp. — CRRX:CAN — $179.4M CAD
8. Crawford United Corp. — CRAWA:USA — $174.0M USD
9. DAVIDsTEA, Inc. — DTEAF:USA — $21.6M USD
10. Enhabit, Inc. — EHAB:USA — $504.5M USD
11. Espey Manufacturing & Electronics Corp. — ESP:USA — $106.8M USD
12. Firan Technology Group Corp. — FTG:CAN — $280.3M CAD
13. Geodrill Ltd. — GEO:CAN — $162.7M CAD
14. Greystone Logistics, Inc. — GLGI:USA — $36.4M USD
15. The Gorman-Rupp Co. — GRC:USA — $966.1M USD
16. Imaflex, Inc. — IFX:CAN — $67.2M CAD
17. Innovative Solutions & Support, Inc. — ISSC:USA — $216.1M USD
18. Kaltura, Inc. — KLTR:USA — $319.3M USD
19. Magellan Aerospace Corp. — MAL:CAN — $1,010.3M CAD
20. Nature's Sunshine Products, Inc. — NATR:USA — $267.0M USD
21. Nephros, Inc. — NEPH:USA — $42.5M USD
22. NetSol Technologies, Inc. — NTWK:USA — $34.3M USD
23. NowVertical Group, Inc. — NOW:CAN — $49.2M CAD
24. Optical Cable Corp. — OCC:USA — $21.6M USD
25. Optex Systems Holdings, Inc. — OPXS:USA — $65.5M USD
26. Paul Mueller Co. — MUEL:USA — $282.9M USD
27. RF Industries Ltd. — RFIL:USA — $45.2M USD
28. TOMI Environmental Solutions, Inc. — TOMZ:USA — $22.2M USD
29. Yellow Pages Ltd. — Y:CAN — $154.5M CAD
30. Zedge, Inc. — ZDGE:USA — $38.5M USD
Introduction to Butler National (BUKS)
Before we get into the thesis, I want to credit an excellent resource: Thomas Niel’s Value Never Sleeps Substack. His deep dive on BUKS lays out the long-term case clearly and is worth reading in full. I’ll reference a few of his points here, but this write-up will serve as my own framing of the opportunity, especially through the lens of my ranking system and the most recent financials.
Part of what I’m trying to do with these posts is highlight independent analysts who are doing thoughtful work. Niel is one of them. Following analysts like him not only sharpens your process, it also gives a feel for which stocks are starting to get discovered. Being early has its advantages, but riding a stock that’s earning credible attention can often mean the gap between price and value closes faster.
This is meant to be an introduction. If you're looking for full diligence, historical accounting adjustments, or granular event tracking, start with Thomas’ post.
BUKS currently ranks as the top stock in the entire universe according to my ranking system.
What is BUKS?
Butler National Corporation is a small aerospace and gaming company based in Kansas. It operates in two distinct segments:
Aerospace Products – Focused on aircraft modifications, maintenance, repair, and FAA supplemental type certificates (STCs). This segment includes special mission equipment and structural changes to business jets and military aircraft.
Professional Services – Primarily a gaming business, operating the Boot Hill Casino & Resort and a DraftKings-affiliated sportsbook under a contract with the Kansas Lottery.
On paper, this is an odd mix. The casino is a cash-flowing asset that generates stable revenue and has historically anchored the business. Aerospace, meanwhile, is scaling. Over time, the mix is shifting toward higher-growth, higher-margin aviation work.
Current Numbers
The most recent quarterly report (Q1 FY25, ended July 31, 2024) showed:
Revenue: $19.8M (+15% YoY)
Net Income: $2.25M (up from $719K)
Aerospace Revenue: $10.6M (+30%)
Backlog: $38.2M (record high)
The company has now posted two strong quarters in a row, with operating income expanding sharply. The aerospace segment posted an operating profit of $1.4M compared to a loss the year prior, and segment margins improved meaningfully.
Valuation
At a ~$100M market cap with $31M in cash and only $2M in recent debt, the enterprise value is roughly $71M. Annualizing Q1 net income gives us about $8.98M in run-rate earnings. That puts BUKS at:
~11.1x P/E
~7.9x EV / net income
This doesn’t include any normalization adjustments, and the company is spending heavily on growth CapEx, particularly on new airplanes and STCs. That skews reported free cash flow lower. But using a rough estimate of maintenance CapEx, I calculate owner earnings at about $8.5 million over the trailing twelve months. With an enterprise value around $71 million, that puts the owner earnings yield close to 12%. Structurally, the business has moved from breakeven to meaningfully profitable. That shift is recent, which may help explain why the market hasn’t fully priced it in.
What Changed
A few notable changes over the last few years are driving improved economics:
Management overhauled. The founder’s family exited operational roles, reducing payroll and improving alignment. The new CEO, Christopher Reedy, was already COO and took over without a pay bump.
Insider ownership improved. Joseph Daly, founder of Essig Research, bought ~12% of the company on the open market and joined the board.
They acquired their casino real estate in 2020, eliminating lease payments and improving margins.
They now own 100% of the casino's economics (vs. 60% previously).
They repurchased ~$5M in stock, mostly from the departing founder.
They built a new hangar and acquired KC Machine to expand aerospace capacity.
Sportsbook revenue is scaling, with DraftKings generating $1M+ per quarter at high margins.
Aerospace is the Growth Engine
The aerospace backlog has been growing steadily, from $22.1M in April 2022 to $38.2M as of July 2024. Management highlighted 20+ active modification projects and expects this growth to continue. They are investing in STC (modifying aircraft) development, modular “kit” solutions, and expanded fabrication capacity.
Margins in the segment have improved as fixed costs are absorbed by more volume. Aerospace also has operational leverage potential, especially if they can streamline execution at their New Century facility to match the performance of their Newton location.
In a typical quarter, aerospace now generates more revenue than the casino. As this mix shift continues, the earnings profile should become more attractive.
Casino is a Source of Stability
Boot Hill Casino is a stable, cash-generating asset. It requires some maintenance CapEx and isn’t a high-growth business, but the addition of the sportsbook has added incremental upside. The DraftKings-branded retail book and online partnership both generate revenue with minimal overhead.
Some investors view the casino as a drag on ROIC. Others see it as ballast—supporting the business during aerospace lulls. Either way, it creates optionality. A sale or spin of the gaming segment could rerate the multiple.
Why It Ranks High in My System
BUKS ranks highly across several categories in my quantitative system:
Earnings growth: Strong YoY gains in recent quarters
Free cash flow to assets: While CapEx is elevated, historical conversion has been decent
Valuation: Low multiples relative to improving margins
Sales and operating income growth: Strong acceleration
Low share turnover and low market cap
Forward revenue yield: High relative to price
It scores especially well on earnings momentum, operating leverage, and subindustry performance. Insider buying also supports sentiment.
Final Summary
Operational improvement, expanding backlog, new management, insider alignment, and clear upside to normalized earnings. Valuation is still reasonable at sub-8x EV/net income, and the business is finally converting fundamentals into bottom-line results.
This is one that I might write more about in the future.
Disclosure: I/we own shares of Butler National at the time of writing.
Disclaimer: Nothing in this post constitutes investment advice or a recommendation to buy or sell any security. This content is for informational and educational purposes only. Always do your own research and consult a financial advisor before making investment decisions.