Savvy Trades and Investments

[SSKILLZ1]

ARQ

I'll pass. I get this is a turnaround, but I highly doubt GP % Seems out of whack and I doubt it repeats at this level. It may be going higher overall from where it was (It sounds like it as they are getting there negative margin contracts out of the business). But 50% seems a bit much, heck if GP % settled out at 40% which is actually higher based on recent history that wipes out almost the whole .10 profit.

 
 GP % per quarter 
 q4 23 49.8% 
 q3 23 30.6% 
 q2 23 25.0% 
 q1 23 17.4% 
 q4 22 25.4% 
 q3 22 24.1% 
 q2 22 19.5% 
 q1 22 18.5% 
 

As you can see from the chart above I see a great deal of risk of margins staying anywhere near this level, and if they don't goodbye profits. Even at .10 the stock doesn't exactly look that cheap where it is traded. There is also seasonality with revs, so q2 is generally going to be a weaker quarter, probably a money loser so can't annualize that as well. I do think GP% won't be revisiting the 20's anytime soon, but it may not stay at 50. Sounds like there is expansion here so maybe increasing revs going foward. Not say the business isn't turning around here possibly and management might be doing the right thing. I just can't get excited about a .10 quarter in a seasonal business where margins are abnormal, pretty much close to untaxed, and we are just guessing here about how sustainable these numbers are my guess, is this is probably a great quarter, and future quarters won't look as good compared to q4, than again I could be completely wrong. Just think there are alot of better opportunities out there that the picture seems more clear and the stock appears more undervalued. All is just my opinion, and I could always be wrong though.