Capstone Companies Inc (CAPC)

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Valuation Discontinuity

When the deal for Capstone went down last year, Stewart got roughly 1x sales for his company ($750K cash and $1.25M in CHDT stock). His stock value has retreated to approximately $250K since that time, making his payout now roughly 0.5x sales.

Now, CHDT is mostly Capstone (got tile sales?), and based on my wild guess for 2007 sales, I make CHDT trading at around 5x sales.

Yes, the market is forward looking, but you have to have pretty good eyesight to make out what next year might look like.

Need hard news of STP products. Have to get the A/S news out there and digested. Need a hurricane.

2Q2007 earnings out in about a month. I don't think they'll be encouraging. Look for fluff PR about the time the 10Q is due.

Real hard news would be better, though.

Regards