CAGC.OB is TOO Cheap!
Nov 30, 2007 Small Cap Stock Picks
First time around we got hit with a hammer in the back of the head on the stock due to unfortunate timing right before the market globally collapsed which now has created a pricing opportunity for us to buy this stock at a deep discount.
let me regurgitate the fundamentals from my previous post:
“Fundamentally CAGC looks great as well with strong year over year growth and a positive outlook for the remaining quarters to be reported of 2007. CAGC.OB expects to report $46-48m in revenues on $8.4-8.6m. This guidance entails a huge year in growth for CAGC over 2006 increasing revenues by 62% and earnings by 60%. From 2005 to 2006 earnings grew 47% so CAGC is growing at a very substantial rate. I would say that CAGC conservatively could grow another 50% into 2008 given its continued accelerated growth which entails income of $13.6m in 08′ or .55eps. The Agricultural Chemicals industry is trading at a 27x earnings multiple currently while CAGC.OB is around 1/2 that multiple with a current P/E of just 14.7x earnings. Even more impressive, if CAGC.OB is able to sustain my estimated 50% growth in 2008 this gives them a dirt cheap forward earnings multiple of 9.63x earnings. With earnings of .55 for 2008 we could theorize a future fair value in its industry around 14.55 found by multiplying the the Industries average earnings multiple of 27 multiplied by CAGC’s earnings estimate of .55.”
So this stock looks very attractive at these prices and appears to be on the rebound. I bought some shares today after analyzing the 60m intraday chart. Price formed a nice looking rounded bottom breakout with the 13ema crossing the 50ma with spikes in volume for confirmation of a possible strong reversal in the making here.
disclosure: Long CAGC
