STV further increases record backlog

In 2005, if margins remain reasonable, they should easily beat the previous annual record for EPS of .84 from 2003. Not bad for a stock trading at $5.40 on the AMEX. Management sounds very confident about the coming year and beyond. I picked up a few more shares this morning ...

HOUSTON--(BUSINESS WIRE)--Jan. 14, 2005--Sterling Construction Company, Inc. (AMEX: STV - News), ("Sterling" or the "Company"), today announced that it was the low bidder on two contracts with a combined value of approximately $17.7 million.
Both the two new contracts entail storm and sanitary systems work along with paving, and they will be undertaken in San Antonio's Bexar County and Houston's Brazoria County. Both projects are expected to commence in June '05 with completion earmarked for 18 months later.

Pat Manning, Sterling's Chairman, noted, "Although the year-end numbers are not yet finalized, it is clear that we ended 2004 with the largest backlog in our history. This favorable business trend is continuing into 2005 with the award of these two additional contracts. Furthermore, the pace of contracts being put out to bid in our key markets is on the rise which along with the multi-year nature of the contract awards represented in our backlog, gives us reason for confidence in a strong financial performance in 2005 and very likely, beyond."

abh3vt: ANII

Thanks for the details on the Q3 margins. If they can grow revenues 15-20% next year as you suggest, that would be quite impressive and should grow the bottom line even more. It was also good to hear that management is interested in moving to the AMEX or Nasdaq.

ANII 10K just filed - looks solid at first glance. Operating income of about 2.9M versus 1.9M in prior year (excludes discontinued ops, and tax benefit). Revenue up 38% y/y. Q4 rougly inline with Q3. EPS of about .51 excluding disc op and tax benefit. Trading at $4. Looks like a good buy if they can keep the growth going ....

RRainman9999, can you be a bit more articulate regarding your concerns about 'huge' debt ? IPII has no long term debt whatsoever. Accounts payable is a routine current liability for a building supplier, offset by large inventory assets. Tangible book value is about $0.60. ERS likewise has no long term debt, just current accounts payable offset by inventory and accounts receivable. TBV is roughly $1.80. There's no debt related risk in either of these two stocks. If you want to see huge debt, I would refer you to AHOM.

Wade: I own IPII and ERS which are my favorites from your list. Both have single digit PE’s on fully taxed and diluted earnings. And both have shown solid growth last year and have good prospects for further growth going forward. IPII is the more speculative, but also has significantly more upside potential especially considering the likely move to the NasdaqSC.

IPII - 1.55 Imperial Industries is a building materials supplier doing business primarily in Florida and neighboring southeastern states. The Company recently received shareholder approval for a reverse split to allow an application for Nasdaq listing. Fully diluted and taxed EPS was .21 through 9 months, and .07 in Q3. Third quarter results include a one time gain, and loss of business due to the hurricanes, that roughly cancel each other out. Revenues were up 33% from a year ago for the 9 month period. Q4 should be strong due to the company’s roofing supplies segment and the rebuilding effort in Florida. Nasdaq listing is likely to occur in Q1, and the stock should then command a PE of 10.

ERS - 4.12 Empire Resources is a distributor of a wide range of aluminum products. Earnings and revenues have grown steadily over the last 4 years, with EPS of .12 in 2001, .24 in 2002, .37 in 2003 and on track for .48 in 2004. 2005 EPS should be approximately .60. Dividend yield is over 5%, including the special year end dividend. Nothing exciting here, but this AMEX listed microcap should provide solid returns in 2005.

ACRG just posted another solid quarter and it on my watchlist. I hope to pick up some shares on a pullback ahead of their seasonally weak February quarter. Trailing PE is now around 10, so higher than IPII and ERS. You may want to reread Bobwins’ excellent post on ACRG of a few days ago.

TGCI has a 3rd seismic crew at work resulting in a strong 3rd quarter. But results may flatten if they don’t keep adding more crews. Also EPS are untaxed, though they have plentiful op. loss carryforwards. A bit pricey for me at this level.

PIHC looks appealing and hweb has been recommending it. I may pick up some shares on further weakness. Looks like a good long term investment.

BSIC showing strong growth with low PE, but I don’t know much about this one … do they have significant o&g reserves ? I’ve put it on my watchlist.

Wade: PDGE

I think the mold removal business comes in smaller orders, hence no announcements of those. But it's still good to see their asbestos removal business gaining more business. And more business enhances their reputation and begets yet more business ...

PDGE: It's impressive that backlog remains near record levels even now, 5 months after the hurricanes. It bodes well for continued strong earnings. Still looks cheap at $1.50, considering EPS of $0.09 last quarter and the continued record backlog.

NWAU hits .65 this morning after 1.25 yesterday. Wow, if it goes any lower, I may start buying back some shares. It's certainly a sobering correction for a Company that has yet to report its finances.

NWAU: Today looked a bit like a short term top for the stock. Only time will tell, but the pullback from the high of 1.25 to a close of 1.00 on heavy volume seems significant. We'll see what tomorrow brings.

lentinman, I agree with you about selling TONS after the huge runnup. It now trades at a big premium to its peers. I still like the idea of going short TONS and long ZEUS. The gap will close between those 2 regardless of what the entire sector does, imho. But still no shares of TONS available for shorting today ... and no options on that stock either. But I finally did get to short 100 ANTP today, though at much lower prices than when I tried the past few days. But I think it's heading still lower.

roguedolphin, most memorable for me is when CALM tried to go private back in August '03 just as egg prices were starting to soar. Luckily shareholders protested strongly, and finally management cancelled its plans. The stock rose 700% in the following 6 months as egg prices went through the roof. Even today, with egg prices back in the dumps, and CALM reporting 2 sequential losing quarters, the stock is remains up about 300% from the time of their going private announcement. Stockholders, and probably even the insiders, would have been robbed if they had been successful. At the time their stock was very thinly traded, and grossly undervalued. The stock has since split 2 for 1 and trades about 30x the daily volume it did in August '03. Insiders have been able to sell all the shares they ever wanted on the open market due to the strong following the stock now has. Of course with the Company now losing money, the stock appears very overvalued, and is a favorite for the shorts. I think TREK management is making a big mistake, but so be it.

JACKSON, MISS (August 18, 2003) -- Cal-Maine Foods, Inc. (NASDAQ/NM:CALM) announced that the Company's Board of Directors approved a 1 for 2,500 reverse split of the Company's common shares in order to effect taking the Company private. If Cal-Maine's shareholders approve the proposed reverse split, each shareholder owning less than 2,500 shares of existing common stock will receive cash in the amount of $7.35 for each share of existing common stock. The transaction has been unanimously approved by Cal-Maine's Board of Directors at a special meeting held Saturday, August 16, 2003, following the unanimous recommendation of a Special Committee of independent directors. The transaction was recommended by the Special Committee following negotiations between management and the Special Committee regarding the terms and conditions of the transaction. Houlihan Lokey Howard & Zukin Financial Advisors, Inc. served as financial advisor to the Special Committee and provided its verbal opinion to the Special Committee that as of August 16, 2003, the consideration to be received by public shareholders of the Company, other than affiliated shareholders and the Company's Employee Stock Ownership Plan, is fair from a financial point of view.

The $7.35 per share cash consideration represents a 33% premium over the $5.52 closing price for the Company's common stock on July 11, 2003, the last day of trading prior to the Company's announcement that it had established a Special Committee of its Board of Directors to explore a "going private" transaction.

larrybaz: those are some very good points. WNMLA is another stock taken off the OTCBB and moved to the pink sheets in the last few months. And HICKA is planning a move to the pink sheets pending a reduction to 300 shareholders. But particulary in the case of TREK, which has been making new highs on record volume recently, it seems that shareholders are getting robbed. Management wants to 'milk' the Company themselves rather than sharing the 'cash cow'. Given the timing of their manuever, it appears shareholders might even have the basis for a lawsuit, though I doubt it will happen.

Excellent post Bobwins. I appreciate that perspective, though I think the stock is due for some kind of pullback regardless of the underlying fundamentals. Up several 100% in the last few weeks.

My limit order to sell 2k TREK at 2.05 just got filled. Volume is now over 250k, a record already. I'm surprised the stock is holding up as well as it is. My guess is that it's speculation of an eventual buyout bid by management. They can probably sell the company at a big profit, given the $6 present value of the reserves. Unfortunately shareholders really got robbed of the chance of getting fair value.

TASR getting whacked again today. Eventually these fliers do have to come back to earth. The stock has dropped over 50% in the last 6 trading sessions.

I just sold a few of my last shares of NWAU at 1.20. Incredible ! But at this rate I may regret it ... the stock may break 2 by later this week. I've gotta believe it's some kind of frenzied trading momentum, rather than anything fundamental. We have yet to see the SEC filings. I still hold 2500 shares in case it really does keep going higher !

NWAU may exceed TREK in price per share by later today. NWAU hit 1.23, and TREK was as low as 1.51 !!! Who could have believed it ????

TREK: I'm holding most of my shares but sold a few at 1.75. Anybody know of the history of other cases like this one ? Will management ultimately buyout the shareholders to go completely private ? Is management looking to buy shares on the open market at rock bottom prices ? What's their motive ?

Bobwins: RSGC

Thanks for your thoughts on RSGC. I'm going to hold my shares as well and still have a nice gain. EPS of .05 last quarter is impressive for a stock trading at .72. They seem to have a good 'niche' product lineup in the insurance business .... much more profitable than standard lines of insurance.

MikeS97797: HICKA

Has HICKA changed its plan to deregister from SEC filings ? Here is their PR from August. The odd lot buyback offer has since been extended ....

CLEVELAND, Aug 11, 2004 /PRNewswire-FirstCall via COMTEX/ -- Hickok Incorporated (OTC Bulletin Board: HICKA.OB), today announced that it is commencing a tender offer for the purchase of all Class A common shares held by shareholders of the Company owning 99 or less Class A common shares, as of the close of business on August 2, 2004, at a purchase price of $10.00 per share. This price per share represents a 47% premium over the $6.79 average bid price of our Class A common shares on the Over-the-Counter Bulletin Board for the 30 trading days prior to July 26, 2004. Beginning today, documents containing details of the offer are being mailed to all shareholders.

Hickok currently has approximately 420 shareholders of record. If after completion of the offer the Company has fewer than 300 holders of record, the Company intends to terminate the registration of its Class A common shares under the Securities Exchange Act of 1934 and become a private, non-reporting company. The offer will expire September 30, 2004 at 5:00 p.m., New York time, unless extended. Eligible shareholders who would like to accept the offer must tender all the shares that they own.

MikeS97707, HICKA.ob is a recent case of a company seeking to become a non-reporting and delist from the OTCBB by reducing the number of shareholders to under 300. However the stock is actually higher now than it was in August when they announced their plan to deregister with the SEC and go private. But it would seem that shareholder prospects for fair value are diminished in a move to the pink sheets. There are a few other such cases that I've come across, but I can't remember the stock symbols.

If TREK is delisted from the OTCBB, which seems inevitable, then it will definitely trade on the pink sheets, imo. Management indicated that the reverse split and delisting was part of a 'going private' transaction. Whether they intend that to mean just becoming a non-reporting company, or whether it implies that shareholders will eventually receive a management buyout offer remains to be seen. Given that they are making this move just as the shares are seeing all-time highs on record volume (albeit still light volume) is mysterious. I can only suspect selfish motives. Perhaps they will ultimately try to buyout shareholders at a small premium to the market price, and then sell the company at a big profit, given the $6 per share present value of their reserves plus the $1 per share tangible book value. I was hoping for a takeover, but not like this !

Bobwins: RSGC has been drifting lower since they announced the merger with Strategy International, valued at $1.75 per share, on 12/17, now trading at a mere .72 after having rallied up to 1.05 on volume of 6 million shares the day of the announcement. Are you suspicious of the merger plan, or will it indeed be consumated around 3/1 as stated in the press release ? And if it falls through, do you think the Company can keep reporting EPS of .05 as they did in the latest quarter ? Below is an excerpt from the PR.


It is anticipated that Strategy International will offer cash and stock, which would result in a value to RS Group common stock holders of $1.75 per common share, to acquire RS Group's outstanding common stock (approximately 65 million shares), representing a 237 percent premium over the closing price of $0.52 on December 15, 2004. Strategy International, with input from RS Group, is in the process of determining the most effective method of achieving this acquisition. The transaction will not be conditioned upon Strategy International obtaining any financing.

"This acquisition provides Strategy with marketing and management resources that further enhance the Company's expansion. RS Group's proven product expertise and administrative capabilities will be an exceptional addition to the Strategy underwriting group," said Stephen Stonhill, President and CEO of Strategy International Insurance Group, Inc.

Strategy International expects the transaction to close on or about March 1, 2005, subject to the necessary shareholder and regulatory approvals. Strategy International estimates that the proposed transaction will be neutral to its 2004 earnings.

Niles: It certainly seems management is acting in their own self interest, and not that of the shareholders as they state in the PR. It's very disappointing news, just as the stock is making new highs and as the value of their reserves has soared with the price of oil. But it's another risk inherent to investing in the microcaps.

TREK going private

DALLAS, Jan. 10 /PRNewswire-FirstCall/ -- Trek Resources, Inc. (OTC Bulletin Board: TREK - News; the "Company") announced today that its Board of Directors unanimously approved a 1-for-100 reverse stock split as part of a going private transaction. The reverse stock split has been structured to reduce the number of the Company's stockholders such that the Company will qualify to terminate its registration as a Securities and Exchange Commission ("SEC") reporting company. The reverse stock split is subject to the approval of the Company's stockholders and certain other conditions. There can be no assurance that the reverse stock split will be consummated.

While stockholder approval is necessary, it is anticipated that shares controlled directly or indirectly by Michael E. Montgomery, the Company's Chairman, Chief Executive Officer and President, and his mother, Faye C. Briggs, will be voted, by written consent in lieu of a stockholder meeting, in favor of the reverse stock split. Mr. Montgomery and his mother currently own approximately 59% of the Company's outstanding common stock and 100% of the Company's outstanding Series A convertible preferred stock. The reverse stock split must be approved by (1) the holders of the Company's common stock as a separate class and (2) the holders of the Company's common stock and Series A convertible preferred stock voting together as a single class.

As proposed, the Company's common stockholders will receive cash in the amount of $2.50 per pre-split share in lieu of any fractional shares of post- split common stock as a result of the reverse stock split. As a result, holders of fewer than 100 shares of pre-split common stock at the time of the reverse stock split will remain Trek stockholders after the reverse stock split. Holders of more than 100 shares of pre-split common stock will receive one share of new post-split common stock for each 100 shares of pre-split common stock, plus cash in lieu of any fractional share. The per share price represents a 14% premium over the closing price of the Company's common stock on January 7, 2005. Our board of directors feel that the $2.50 per pre-split share of common stock to be received by holders of common stock who will hold fractional shares immediately following the reverse stock split is fair, from a financial point of view, to the stockholders.

Upon consummation of the reverse stock split, the Company intends to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company will then cease filing reports with the SEC and the Company's common stock will no longer trade on the OTC Bulletin Board.

Mr. Montgomery stated, "It is the opinion of Trek's Board of Directors that going private via a reverse stock split is in the best interests of the Company and its stockholders. Trek's common stock is not very liquid in the public market and stockholders do not receive any appreciable benefit from Trek being a public reporting company. In today's business and regulatory environment, the costs and burdens of being a public company far outweigh the benefits for a company the size of Trek."

Argyll: IPII reverse split

From my conversation with the CFO, Howard Ehler, this morning, IPII's planned reverse split is contingent upon being accepted for NasdaqSC listing based on all other qualifications. Then they will implement the split and get listed. They don't want to do a reverse split any earlier than they have to, as that event is normally interpretted negatively by the markets, and typically the stock price (adjusted) drops. If the split occurs simultaneously with the NasdaqSC listing, the price should rise instead.

lentiman, I'm a bit pessimistic on the long term for this stock, but it's a great story, be it true or not. And clearly investors and traders are having a love affair with NWAU.pk, for the time being, anyway. I'm glad I came along for the ride, but also glad to have realized some profits. It will be interesting to see the SEC filings in a few weeks, and what the stock does before then, and after !

hweb, congratulations on WSTF. I considered buying it after your posted several times recommending it in the 3's, but I couldn't get excited about it and didn't think would rally as strongly as it has. Damn that was a mistake, but then again, hindsight is always perfect !

Damn, I took profits in NWAU in the .70's on Friday thinking it was due for a pullback. I still have some shares, but clearly sold too soon. This stock is amazing and so is the volume. If their earnings guidance is at least partly true, then all is well, but if not, then 'look out below'. Good luck to all with this flier.

Just spoke with IPII CFO Howard Ehler

He said that their NasdaqSC listing application will be filed 'shortly', but would not give a specific target date, saying just that there was a fair amount of paperwork to complete. Their reverse split will be implemented if they are accepted for Nasdaq listing, which seems very probable since they meet all other listing requirements. He said Q4 would likely again not be reported until late in March due to the heavy seasonal work backlog of the auditors. He implied that their roofing supplies business has been exceptionally strong in Florida since the hurricanes, but could of course not provide any details. He remains optimistic about continued strength in new home building in Florida and the Southeast, and said the Company is considering further expansion in the future. IPII earned 0.21 through 9 months of 2004, and looks undervalued at 1.55, especially considering their strong growth, that results are already fully taxed, and their good prospects for a NasdaqSC listing.

MANC should have a strong quarter

Just heard a report on CNBC that Dell's plasma TV's are in such strong demand that there's a 6 week wait to buy one. That's a good sign for plasma display resellers like MANC. And hopefully they've been able to 'jack up' margins as sales increase. MANC is up 12% ytd, versus a generally weak tech sector. Their quarter ends Jan 31. Hopefully we'll see a further runnup before they report.

Are ZEUS and IIIN a 'steal' ?

The 3 steel processors that I follow are TONS, ZEUS and IIIN. Until November they traded pretty much in tandem, but since 11/2/04, TONS is up 192% versus only 22% for IIIN and 44% for ZEUS. TONS just reported another record quarter with EPS of 2.37 for their November quarter, up sequentially from 2.17 in the August quarter. That bodes well for strong quarterly results from IIIN and ZEUS. I'm pessimistic about the sector long term, but the short term outlook remains excellent, and TONS reported a strong backlog. ZEUS reported EPS of 1.80 in their September quarter, yet now trades at a deep discount to TONS, with a current share price of about 25 versus 66 for TONS, even with similar EPS. I think the gap will have to close, and I wanted short TONS and go long ZEUS. However no shares of TONS are available for shorting, so I went long on ZEUS anyway. It will be interesting how it plays out ....

OT: ANTP

This is certainly a strange case and I would have expected the stock to be much lower by now. I'm glad I never found any shares to short, because this stock has become more about trading than fundamentals. Huge volume today and up over $7. Today's volume of 2.8 million so far equals 4x the public float. Right now it's strictly a daytrader's stock, but longer term I think the volume will settle down and the stock will trend downward. But going short is a risky game - there are so many overvalued stocks out there, yet many of them keep going up anyway.

I've been accumulating NWAU and bought 5k at .61 before the close. However I remain skeptical even as I am buying, because 'talk is cheap' and it's easy to tell a great story, that in reality is mere facade without substance. Fortunately we won't have long to wait, since the Company plans its SEC filings by the end of January. If February rolls around and they haven't filed, I will become ever more skeptical. I view my investment in NWAU as a stock option. It gives me lots of leverage for a 5 or 10 bagger, but the Company's financial guidance could also turn out to be a scam, with the stock trending to zero. TELT's press release boasting the planned sale of 24 million shares at $1.88, and VLXC's fantastic earnings guidance are examples of questionable PR and likely scams. But I think NWAU has much more potential to be a winner than those other two ....

Bobwins, since the new board will effectively be a spinoff from this board, I think it's a good idea to keep the 'Value Microcaps' title. I like 'Value Microcaps Off Topic', or 'Value Microcaps Other Opportunities', or 'Value Microcaps Story Stocks'.

MSGI: SHO regulations affect only heavily shorted stocks. It should not affect the broader market, imo. This is a correction that will run its course. New year profit taking in the small caps is partly to blame, however I believe money managers are on the sidelines with new cash to invest at the opportune time. Hopefully we'll be getting a rally soon.

hweb: ANTP -7.75 to 37.70

It's down less than I would have expected given the sharp sequential drop in EPS and order backlog. Still no shares available for shorting at Waterhouse or Ameritrade. Hweb, at which broker were you able to get shares for shorting ? Did you have any trouble getting them ?

ANTP will definitely take a big hit tomorrow. I tried several times to short it over the last 2 weeks, including again today, but no shares were ever available for shorting. EPS of .22 in November Q2, versus .39 in Q1 does not justify $45 price. Backlog down as well.

Cash inflows may cause a nice bounce. This is a bad way to start the year, but money managers may be watching from the sidelines eager to buy the selloff once it has run its course. That's what happened in January 2001. In the first 2 days the Nasdaq sold off over 9% from 2470 to 2251, but the third day it had a huge rally over 2600, and for the month closed at over 2700. I don't think it will be the same this year, but I do believe all the new sidelines cash will cause a nice rally at some point in the coming days or weeks.

2005 is not off to a good start. I hope that's not a harbinger for the whole year. I sold my remaining position in ETEC today. There seems to be good support just under $3, but I think it's gotten near fair value. But it was a great run, and I'll gladly buy back shares if it dips again.