The Hunt for the Next 10 Bagger

[TakeChances]

This was posted by NaturalbornInvestor and highlights some great info about APRO. If you read through their PRs this stock is EXTREMELY undervalued at this point. GLTA.

APRO Due Diligence

WEBSITE
www.allprobiz.com

OVERVIEW
Diversified range of services (Staffing, HR administration, Financial Services)
Allegiant Professional Business Services, Inc. provides staffing and business processing services to municipalities and small businesses. The company’s staffing services comprise on-demand or short-term staffing assignments, contract staffing, long-term or indefinite-term on-site management, and human resource administration. It also provides various financial services, including benefits and payroll administration, health and workers' compensation insurance programs, personnel records management, and employer liability management services to small and medium-size businesses… http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=APRO:US


FUNDAMENTALS
1) Outstanding Growth: Payroll tripled to $100m in 2009 – min. $300m exp. in 2010
a) “Allegiant Professional Business Services Inc. to exceed $30M in Revenue for Period Ending September 30, 2008.”
http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=APRO%3AUS&sid=aVAF_yrkUe4g
b) “…Allegiant Professional Business Services Inc., a $100,000,000 annual revenue staffing and PEO (Professional Employer Organization)…”
http://top-news.news-articles.net/content/group-signs-employee-contract.xhtml
c) “APRO has added a significant number of clients in recent months and we are planning for extensive grown in 2010.”
http://www.earthtimes.org/articles/show/allegiant-professional-business-services-inc,1089961.shtml


2) Outstanding Gross Margin
“…PEOs charge a service fee for taking over the human resources and payroll functions of the client company: typically, this is from 3% to 15% of total payroll… In addition, PEOs benefit from aggregation of employee headcount: by combining the employees from multiple clients, they qualify for lower premiums on health insurance plans.”
http://en.wikipedia.org/wiki/Professional_employer_organization


3) Organic Growth
“…Our business is continuing to grow at an outstanding run rate. We estimate annual payroll runs upwards of Ninety Million Dollars ($90,000,000.00) for year ending December 2009. We will continue to aggressively seek strategic acquisitions to further grow the business".
http://srph.it/cEYt4m

“…Our business is growing and generating excellent cash flow which allows for investing in Allegiant stock as well as continuing to seek strategic acquisitions to assist in executing on our plan…”
http://srph.it/bNhNEJ


4) Active Share-Buyback Program
“…today announced that its board of directors has approved the repurchase of up to an aggregate of 15,000,000 shares of its common stock…The purchases may be made, from time to time, on the open market in compliance with Rule 10b-18 and will be funded from available working capital…”
http://finance.yahoo.com/news/Allegiant-Professional-prnews-1807420847.html?x=0&.v=1

“…"We believe the current valuation of Allegiant's common shares makes the repurchase of our equity a solid investment for the company and are committed to continuing the program.”
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=PR&date=20091207&id=10841358


5) Attracting Large Clients
…Allegiant Professional Business Services Inc. (Pink Sheets: APRO) has signed a strategic partner agreement with Amerisource Payroll Solutions LLC and its related companies. APRO CEO David Goldberg estimates that the Amerisource business may add $200 million in gross payroll over the next 12 months…
http://srph.it/dBKaLW

…SK3 Group, Inc. announces that on October 21st, 2009 it signed a two year contract with Allegiant Professional Business Services Inc,… to service its 20,000 plus employees…”
http://www.earthtimes.org/articles/show/sk3-group-inc-signs-20000-employee-contract,1009127.shtml
Allegiant Professional Business Services Inc. Now Offers Health and Workers Comp Package to Independent Truckers: Targets Increased Revenues of $18 Million Over 12 Months…
http://www.redorbit.com/news/business/1727852/allegiant_professional_business_services_inc_now_offers_health_and_workers/index.html


6) Committed to Full Reporting Upgrade
“…Goldberg continued, "The filing of the aforementioned 10KSB, and subsequent filings to follow shortly, will allow Allegiant to apply for re-listing on the Over the Counter Bulletin Board (OTC: BB), a regulated quotation service for fully reporting companies…”
http://www.pinksheets.com/pink/quote/quote.jsp?symbol=apro#getNews



SHARE STRUCTURE
A/S: 980M
O/S: 86M
Float: 36M
(Confirmed as of 24th March. 2010)



VALUATION
To be conservative, low-end service fees, a low profit margin and a low P/E multiple are assumed. Calculations are performed with the confirmed O/S share count that might not fully reflect the active share-repurchase program. Estimated values for 2010 only take into account contracts that are already known and reported.

Payroll 2009: $100m
Service Fees: 3% - 15% of total payroll
Est. Net Profit: 1%
O/S: 86M
Gross income: 0.03*$100m = $3m
Net Profit: 0.01*$100m = $1m
EPS: $1m / 86M O/S = $0.0116
PE 10 >> $0.0116*10 = $0.116 (>> minimum valuation! APRO grossly undervalued)

Payroll 2010e: $300m
Service Fees: 3% - 15% of total payroll
Est. Net Profit: 1%
O/S: 86M
Gross Income: 0.03*$300m = $9m
Net Profit: 0.01*$300m = $3m
EPS: $3m / 86M O/S = $0.0348
PE 10 >> $0.0348*10 = $0.348




ASSOCIATED FIRMS
a) Amerisource Payroll Solutions (Strategic Partnership)
“Amerisource Payroll Solutions…powered by allegiant”

“…Your company's employees are legally employed by Allegiant for tax reporting and insurance purposes. Allegiant takes on many employer responsibilities and liabilities of worksite employees. This includes wage reporting, employment tax reporting, workers' compensation administration, unemployment insurance administration and employee benefits administration. Allegiant is established as the employer of record…”
http://www.amerisourcepayroll.com/index.htm
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48065243


b) Smart-Tek Services (STTN.OB)
same management, same business focus, same corporate headquarters
http://www.smart-tekservices.com/
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48065243


c) AMS Outsourcing
founded and owned by President of APRO
http://www.amsoutsourcing.com/
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=48065243