CTON-I've been accumulating shares in this one as I believe they will be reporting strong numbers over at least the next few quarters. This one has been discussed on this board but here is some more info I found:
CTON is primarily a homebuilder in Vero Beach, which is near the east coast of Florida and about 70 miles north of Palm Beach. The market in that area continues to be strong. I looked at the 10Qs for the last 3 quarters. CTON sold 1 home in Q1, 9 homes in Q2, and 10 homes in Q3 (last reported quarter). Most of their business is presale (customer orders a home from one of their stock plans that is not built yet). It takes awhile for all this new business to show up on their financials since CTON only counts them as sales after the homes are built and the sale is closed and title is transferred. They do not use a percentage completion method for reporting.
CTON delivered 4 homes in Q1, 2 homes in Q2, and 6 homes in Q3.
Their order backlog has grown from 4 homes at the end of Q1, to 11 homes at the end of Q2, and 15 homes at the end of Q3. That is an impressive growth in numbers. Furthermore, much of their backlog is in a golf course development called "Pointe West". They tied up 41 lots there back in april of 2004. Land prices have risen substantially since then while CTON appears to have those land prices locked in which should mean higher profit margins on sales going forward. I calculated that the average sales price over the last 3 quarters was $583,000. Looking at their website, the average sale price of the homes they now are offering (spec and presale) is $644,000. The actual sales price will likely be higher with customer options and upgrades. Last year the average customer increased the sales price by 12% with upgrades.
I have no way of knowing how many projects will actually close in Q4 (numbers should be out by early march) but they should be good. They should easily do 5-7c for the quarter which annualizes out to a PE of 2 or3 for this 56c stock. Also from their website, I noticed that a couple more homesites changed to "sold" just in the last two weeks so business is continuing. This one looks to me like it could double over the next few months, but do your own DD.
AI
