A Cream Puff In Used Cars
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Written by Steve R. Lowry
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Monday, 09 February 2009 |
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How's this for an unusual investment: a company based in Belgium and Cyprus whose business is shipping used cars from Europe to Africa. That's how ACLN Ltd. (ACLNF), which trades as an American depositary receipt on Nasdaq, makes its money. Last year, the company netted $22.2 million on $97.5 million in revenues, or $2.66 a share. At the recent price of 27?, that's a bargain basement p e ratio of 10.2. Some investors who have discovered this gem think the shipper will be a double within a year.
Why so cheap? It's virtually unknown on Wall Street. That allowed shrewd buyers such as Fred Astman of First Wilshire Securities in Pasadena, Calif., and Philip Hershberg of the Deermont Market Center in Wellesley, Mass., to accumulate shares at bargain prices.
Both expect earnings of at least $3.50 a share in 2000, which would take the stock up around 37 with no change in p e. Yet both argue for a higher p e, since other companies in the expediting and shipping businesses have p e's two to four times higher. Hershberg hopes that a 5 for 4 stock split set for May 18 will add liquidity to the shares and interest new investors.
Astman, whose firm owns 3.4% of the shares, thinks profits may hit $4 a share this year. That's because the company, which buys space on others' ships, is launching two of its own. The first sails May 20. Says Astman: "This will give the company more leverage in pricing."
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Last Updated ( Monday, 09 February 2009 )
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