Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| An
Undiscovered Micro-Cap Stock that is Trading Below
its Break-Up Value |
Published: June 22, 2005
In my weekly premium
newsletter -- Undiscovered
Micro-Cap Gems -- my goal is to introduce readers to a variety of
promising micro-cap investing ideas that they may wish to consider for
their portfolios. In doing so, I generally look for small, neglected
companies that have been overlooked by conventional Wall Street sources.
I also look for undervalued firms that are trading at a steep discount
to their intrinsic value. Many of these individual investment ideas have
the potential to deliver triple-digit percentage gains in the years
ahead.
Below you'll find an
in-depth look at one such investing idea that I introduced my readers to
last weekend. Because I first sent this article to my paid subscribers
last weekend, please note that all prices listed in this article are as
of the close of trading on Friday, June 17th. Please also note
that after I introduced this quality company to my readers several days
ago, the stock has rallied sharply higher.
To gain access to
dozens of similar investing ideas each and every week, you'll need to
subscribe to my Undiscovered
Micro-Cap Gems service. In the meantime, I sincerely hope you enjoy
today's sneak peak at one of my most recent micro-cap investing ideas...
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American International Industries (AMIN.OB, $5.70)
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American
Intl. Ind. (AMIN.OB)
Sector = Services
Industry = Business Services
Market Cap. = $16.67 million
Enterprise Value = $13.21 million
2004 Revenues = $21.44 million
2004 Gross Profit = $5.88 million
2004 Revenue Growth = +170.4%
Insider Ownership = 37.85%
Institutional Ownership = 0%
Insider Activity (ttm) = Neutral
Enterprise Value/EBITDA = 7.7 |
American International is a
holding company that operates a number of wholly- and partially-owned
business entities. The company has subsidiaries in the oil & gas,
real estate, and manufacturing industries. These include a 51% stake in
Delta Seaboard Well Service, a rig-based well servicing contractor that
provides services to the oil & gas industry, as well as full
ownership of Brenham Oil & Gas, a firm with substantial royalty
interests.
The company also has a majority stake in International American
Technologies, a distributor of polyurethane chemicals and spray-on
lining for pickup truck beds, as well as full ownership of Northeastern
Plastics, a supplier of automotive products and consumer durables.
The company's focus is on identifying profitable business opportunities
in various industries and then assisting in the growth and development
of these acquired companies. The firm is able to increase shareholder
value whenever it manages to improve upon the results of the firms it
has purchased. In many cases the company then sells these businesses in
an effort to lock in substantial gains.
This stock initially caught my attention when I noticed a press release
that stated AMIN.OB owned waterfront property at an asking price of
$16.3 million. With a total market cap of only $16 million, I felt the
stock was worth exploring further. Here's what I found:
In April, the company announced plans to sell 287 acres of waterfront
property near Galveston, Texas for a list price of $16,330,000. On the
balance sheet, this property is recorded at its historical cost of just
$225,000. The listing broker has informed AMIN.OB that several potential
purchasers have expressed interested. The land is suitable for high-end
development uses, such as hotels, shopping centers and other commercial
and residential projects. Clearly, this asset provides a significant
margin of safety for investors in this company.
Last quarter, American International posted revenues of $4.1 million, a
sharp +43% increase from the amount reported in last year's first
quarter. Nearly all of the firm's revenue growth was attributable to two
subsidiaries: Delta, which posted a +30.8% increase in revenue to $2.77
million, and Northeastern Plastics, which reported revenues of $1.35
million, representing an +81.5% year-over-year gain.
A significant -30.9% drop in SG&A expenses further enhanced these
impressive gains. However, even though operating income surged from a
loss of -$193,000 to a profit of $321,000, the company still posted a
$1.76 million net loss for the quarter. The weak bottom-line figure was
the result of a $3 million unrealized capital loss in one of the
company's holdings -- Orion Healthcare (ONH). The value of the company's
875,000 common shares (which were converted from preferred shares) has
dropped precipitously and was marked down, but management expressed
confidence that it will eventually recoup its investment here.
For a company with an adjusted enterprise value of only around $10
million (Market cap of $16.7 million + total liabilities of $6.9 million
– cash of $8.9 million – short-term investments of $0.3 million -
long-term investments of $4.3 million = $10.1 million) American
International has attractive assets and solid growth prospects. Assuming
the firm's long-term investments are fairly liquid, it appears that this
micro-cap is now selling well below its break-up value. In addition, the
company's underlying portfolio of businesses looks healthy and has
promising growth potential. With this in mind, although I would
recommend more in-depth research on this company, a small-position may
be warranted for those with a long-term investment horizon.
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Important Note: The above article
was merely a small excerpt from a recent issue we sent to subscribers of
our premium value investing service -- Margin-of-Safety
Investing. In each issue of that newsletter, editors Nathan
Slaughter and Paul Tracy deliver an in-depth look at a variety of other deeply discounted
stocks that should provide investors with a solid margin of safety at
current prices. To receive your copy of our most recent issue of Margin-of-Safety
Investing, as well as other guidance similar to this twice per
month, you'll need to subscribe to this publication. To learn more,
please visit:
https://www.streetauthority.com/subscribe-msi.asp
Thanks for reading!
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Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
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in-depth guidance on today's leading value opportunities, plus educational guidance, please subscribe to
Nathan Slaughter's premium value investing newsletter --
Half-Priced
Stocks |
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
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