Stockprowler's wild card pick for
January 2006.....
Plasticon International, Inc.-Pink Sheets: PLNI
Closing Price Friday 1/06/2006: $0.0056
In the 1967 film, The Graduate, a young Dustin Hoffman is worried about his future. He is advised by a family friend to take a look at "plastics". Nearly 40 years later that advice might now be "recycled plastics." The rising trend in the price of steel over the last 2 years has had a significant impact on the construction sector and has been a hot topic in the industry. According to a recent article in the Miami Herald, steel is increasingly becoming a precious metal in the American economy. Thanks to a billion dollar a year appetite for scrap steel in fast-developing China, a rebounding U.S. economy, and a weak dollar, steel prices have skyrocketed and supplies are short.
So what has this got to do with recycled plastics you ask? According to Jim Turek, CEO of Plasticon International, Inc., "We certainly believe that the rising price of steel is one of several major industry trends that is helping Plasticon achieve success with our plastic rebar support product line… Our domestic distributor, the largest building materials distribution company in the U.S., has noted that demand has been increasing steadily. We believe that the dramatic rise in the price of steel over the last year and a half has made construction companies look harder at other options, rather than relying solely on steel products. And when they see what Plasticon has to offer, they realize that our innovative products are not only more cost-effective, our cutting-edge engineering also gives the end user a much better product, which is stronger, much easier to install, more versatile, and offers the most advanced design and engineering product line in rebar supports ever to be offered in the marketplace."
Plasticon International, Inc. (www.plasticonintl.com) designs, produces, and distributes high-quality concrete accessories, transportation signage, plastic lumber, and office supplies which are all produced from recycled and recyclable plastics. Plasticon International is environmentally friendly, using recycled plastics to produce its line of products. Plasticon International has been in the recycled plastics business for 17 years. Initially, the construction and transportation industries were reluctant to accept recycled plastic products. Today, the patented Plasticon products are widely accepted and are viewed as stronger and more durable than more costly steel counterparts. The company's line of patented, plastic concrete accessories has been approved or accepted in all 50 states and several foreign countries including Poland, Israel, Canada, Mexico, and Egypt. In addition, its transportation signage has received DOT approval or acceptance in all 50 states.
A unique feature of all Plasticon products is that they are of the highest quality, yet do not require virgin raw material. Using recycled materials significantly reduces the cost of manufacturing. Plasticon is considered a green company… Plasticon's use of environmental waste as raw material in the production of new and innovative products will continue to reduce waste since the new products are themselves, recyclable.
The company's primary products are concrete accessories, which account for 80% of its revenue. Plasticon's patented products are recognized as the best in the industry and are without serious competition. The company is also involved in the plastic lumber market. Plastic lumber sales in the U.S. are growing at 40% per year, topping 16 million board feet, or about 40 million pounds last year. That compares with 81.5 billion board feet of wood used in the United States annually. The market is growing and new applications are being discovered each year. Plastic lumber does not rot, crack, splinter, decompose, or degrade. Plastic lumber can withstand moisture and changes in temperature as well as attacks by insects such as termites. It is also impervious to salt water and marine infestations that will destroy wood. The product can be drilled, nailed, sawed, and routed like wood and requires very little maintenance. It is available in a variety of colors and textures and needs no painting.
Plasticon also produces plastic signage that is stronger and more durable than aluminum signs, are UV-stable, and will not sustain damage from the sun's rays. They are also unattractive to thieves who remove aluminum signs for salvage value. The company's office supply products are the most recent addition to Plasticon International's product line. All products are manufactured from recycled plastic. Plasticon has received approval by the General Service Administration (GSA) for their inclusion in its catalogue of products from which all government agencies may purchase from the GSA.
On December 9, 2005 the company announced that it has successfully completed the privately financed and definitive agreement for the acquisition of Pro Mold, Inc., pending SEC approval. Pro Mold, Inc. is currently profitable and generates revenues of approximately $5 million annually. Pro Mold, Inc. is one of the premiere injection molding companies of the Midwest. The Pro Mold facilities will be wholly owned by Plasticon, and will become the centerpiece for manufacturing operations. As a result, Plasticon will no longer rely on contract manufacturers, thus improving the company's bottom line.
The Pro Mold facilities allow Plasticon to greatly advance production capabilities. With the addition of the new high-capacity molding machine that Plasticon recently purchased, the plant will now be able to produce up to $28 to $30 million in sales annually. "This acquisition symbolizes a move to the next level for Plasticon, we can now control the future of the company through our own proprietary manufacturing methodology. This is a great day for Plasticon and our investors," stated Jim Turek, President and CEO of Plasticon International, Inc.
According to CEO Turek, "Production capacity for all of our patented rebar support products is increasing exponentially as we replace the older generation of molds with the latest generation, most advanced, state of the art injection mold technology. This new generation of molds allows us to improve output costs, increase production capacity and improve efficiencies greatly. Additionally, our recently patented PAC Chair III product continues to exceed expectations and potentially may become our number one selling rebar support product. We will continue to strive to be the most innovative force in recycled plastics in 2006."
Plasticon is in the process of completing the acquisition of SEMCO Manufacturing, Inc., a cutting-edge surfacing technology company, which will allow us to synergistically offer SEMCO's surfacing products with Plasticon's existing rebar support product lines. SEMCO Manufacturing, based in Las Vegas, Nevada has, since 1981, provided innovative surfacing products to many of the city's most impressive showcase projects, including the world-famous fountains at the Bellagio, Las Vegas's premier hotel-casino, the MGM Grand and The Venetian Hotel-Casino. Their eclectic customer base also includes high-profile commercial, public and private clientele. SEMCO currently has operations located in Japan, Hong Kong, Singapore and Australia, as well as the U.S. The market for SEMCO's products is virtually unlimited, thus setting the stage for SEMCO to potentially become the most profitable aspect to Plasticon business in the years ahead. The acquisition of SEMCO is nearly completed and should be finalizes in January or early February of 2006.
There are four major industry trends that we believe are very advantageous to Plasticon over the next several years:
1. Environmental law is becoming stricter. Compliance is a very serious issue in the industry and increased environmental regulation helps the Plasticon bottom line.
2. The business is built on recycling, so there is an abundant supply of raw materials for its products. Recycled resin products are not only plentiful; they are also cost-effective. In 2005, the company contracted with 7 new suppliers of recycled resins, broadening its base of supply, as well as increasing the availability of resin.
3. The price of steel has skyrocketed the last 2 years, which gives distributors and construction industry yet another reason to use Plasticon's recycled plastic rebar supports rather than steel. This is true both domestically and internationally.
4. There are industry indicators that show that there will be increased domestic construction over the next several years. The U.S. Senate recently passed a $285 billion transportation bill. Plasticon is the only company in this sector that is DOT approved or accepted in all 50 states and territories.
Stockprowler views PLNI as a rare speculative opportunity with 10 bagger potential in the next 3 to 6 months… Strictly our opinion.
Well, all right, that's it for now… place your bets, sit back and relax. Remember, this is speculation not investing and quite often we get rewarded BIG for taking a chance…
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