Derby Downs - Stock Picking

[Stock Rockstar]

The hidden gem, or in this case $PERL

Business Description:

Perla Group International is an emerging leader in the international military, police and security solutions sectors. It was established with the vision to become the industry's leading turnkey solutions developer and services provider. Perla Group's success is built on a combination of the trust, backing and support of top industry specialists and a talented team's unwavering commitment to service excellence. With its four divisions; Perla Telecoms, Perla Aviation, Perla Armored Cars and Perla K-9 Services, it places Perla Group in a unique position to service many of its existing clients with multiple value added services and thereby attract key new clients

Company Info:

4737 N. Ocean Drive
Fort Lauderdale, FL 33308

Website: http://www.perlagrp.com
Phone: [phone]
Email: [e-mail]

Reasons why It looks attractive at this level:

Low floater, O/S Reduction, New Contracts signed, R/M in Progress, Profitable sub penny company (very rare)

1. Low Floater:

Market Value1 $1,117,014 a/o Mar 15, 2012
Shares Outstanding 223,402,805 a/o Sep 30, 2011
Float 19,747,514 a/o Jun 30, 2011
Authorized Shares 450,616,368 a/o Jun 27, 2011
Par Value 0.01

2. O/S Reduction:

Perla Group Reduces Outstanding Shares by 55% 01/25/2012 - http://ih.advfn.com/p.php?pid=nmona&article=50892875

3. New Contracts signed:

11/9/2011 Perla Group Signs $1.8Mill Contract for Sale of AK1-3 Helicopters - http://ih.advfn.com/p.php?pid=nmona&article=49868124

3/5/2012 Perla Group Discusses $665,000 in New Armored Car Contracts - http://ih.advfn.com/p.php?pid=nmona&article=51489881

As per Feb 29, 2012 PR: The company has also received 2 new armored vehicle contracts for February 2012. These contracts expected to be completed in March and April 2012
totaling $665,000.00. The company is now looking to expand on its existing client base, and looking to acquire new assets within the armored vehicle industry.
The armored vehicle market, is now worth over $12Billion USD, and growing, according to industry reports.
Reference: http://www.visiongain.com/Report/596/The-Armoured-Vehicles-Market-2011-2021


4. R/M in progress:

As per Feb 29. 2012 PR http://ih.advfn.com/p.php?pid=nmona&article=51426712

The company is in the process of reviewing information on 2 possible acquisition targets for its aviation division. These companies operate in the aviation MRO/FBO industries, and are based in the USA. An acquisition in this area will further enhance the company's target of establishing the AK1-3 helicopter well into the USA and Latin American markets.


5. Revenue:

Look at the last 10-Q report filed in Feb, 2012 http://www.otcmarkets.com/financialReportViewer?symbol=PERL&id=73235

Revenue: 1 Million and Net Profit: 250K. This is only last quarter results. Also new contracts signed will be refelected in the next 10-Q.

6. Valuation

As per the recent filngs, Net profit for 9 months is 900K. With new contracts signed in the last two quarters revenue for this quarter will be more. But to be conservative, lets assume annual profit is $1.2 million.

EPS: $1.2 million / 220 million Shares = 0.0055
At P/E = 10, the PPS should be 0.055
At P/E = 20, the PPS should be 0.11

This is a growing company and the valuation should be based on the Forward P/E.