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PAOS..$0.16..Complete DD package

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Traderfan Member Profile Traderfan Member Level 
Monday, July 09, 2012 12:50:40 PM
Re: None Post # of 466 
PAOS..$0.16..Complete DD package


Homepage:

http://www.precaeroinc.com


Company description:

"PRECISION AEROSPACE COMPONENTS INC. is a provider of quality aerospace components. The Company's vision is to build a leading aerospace component, fabrication and service business. Management plans to grow the company through a combination of product line expansions and strategic acquisitions."


Filings:

http://www.sec.gov/cgi-bin/browse-edgar?company=precision+aerospace&match=&CIK=&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany


Latest press release:

http://www.sec.gov/Archives/edgar/data/936446/000112178112000207/ex99one.htm


Share count (july 2012):

Oustanding shares: 3,68 million shares

Preferred shares oustanding: 5.94 million shares (convertible into 9.24 million common shares)

Fully diluted share count: 12.92 million shares

Float only 1.2 million shares



Investment thesis:

Company is profitable on a fully diluted basis right now on about 8 million in sales and and it reports with the SEC.

Now they aquired "Fastener distribution and marketing company" for 9.3 million USD paid with a revolving loan and no equity. That's pretty significant for such a small company to make a 10 million aquisition without any equity.

http://www.sec.gov/Archives/edgar/data/936446/000112178112000194/paos8k53112.htm



They project 33 million in sales and 3 million in pre tax operating profit for a 12 month period.

"In the upcoming 12 months, the combined companies anticipate producing over $33M in revenues and an operating profit (before any expenses associated with the acquisition and taxes) of over $3M"

http://www.sec.gov/Archives/edgar/data/936446/000112178112000207/ex99one.htm



The fully diluted market cap right now is only about 2 million for a company which guides for about 33 million in sales on a yearly basis with the new aquisition while they are already profitable on 8 million sales. They guide for 3 million in pre tax operating income as well. How much of that will go down to the bottom line eventually? It could be enormous.

Their actual outstanding shares is only 3.6 million with 62% held by management but they also have preferreds outstanding. The good thing is that 89% of the preferreds are held by management as well. That leaves a float of about 1.2 million at this moment. Stock is very thin and went up quite nicely lately. I wanted to post this at 8 cents 10 days ago and had it prepared but then I waited since it started to move. I do however think 15-20 cents is still very attractive if they come through with their guidance and do not blow up something else.


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