Value Microcaps Motherboard

[cliffvb]

MVK- This is one I like in the oil service sector. It is not a small cap but it is certainly a value stock with a trailing PE of under 8 and a forward PE of less than 7 with rapidly growing sales.

80% of MVK's sales are to the energy industry. MVK manufactures OCTG (oil country tubular goods) primarily well casings and pipelines to oil and gas companies. They are currently selling them as fast as they can make them and pricing is also very strong. In spite of strong sales growth, their profits are down and their stock price has gone nowhere in the last year. Most of their recent earnings shortfalls have been caused by their use of FIFO accounting for raw material (steel) costs. The price of steel doubled early this year and that became their cost basis for much of their sales last quarter. Steel prices have fallen substantially since and so their profit margins should greatly increase going forward.

MVK is nearly doubling their output capacity this year to meet the strong demand for OCTG. Sales and profits should show continued large increases. I also believe that anal-ysts have underestimated revs and profits for 2006. They project a revenue increase of only 3% next year with earnings of $4.90. Even that would be a forward PE of a little over six at MVK's current price. I expect they will earn at least $6. At a PE of 10, they should be a double of the current price.

One caveat is that the COO resigned last month. However, company execs just reiterated their earnings projections of 90c in Q3 and 1.25 in Q4 in a conference call last week so I don't believe that more bad news is coming.

Do your own DD but I believe that this is another gem in the rough that will be polished over the coming year.