Value Microcaps Motherboard

[southacresdave]

re: ALY niles_crane3. As you know, it's all a guessing game. Joseph Morgan has discontinued coverage of ALY, but wrote a report on January 19th:

http://www.morganjoseph.com/research_research_online.php

They put earnings for 2006 at 98 cents based on 20% tax bracket. Based on CEO's comment of 7-8% tax bracket that would put earnings at $1.12 instead. (In his discussion of 2006 projections he doesn't say what the company thinks will be earned. He uses the analyst's report as his basis for numbers.) Two things I don't think the analysts are putting in their estimates are growth from the casing & tubing material purchased in Sept. 2005 (for $15M). They got no customers in that deal, however the CEO mentions during one slide that proforma EBITDA of the prior 9 mo (to take into account acquisitions) should be $34M vs $31 listed due to the growth they've already have seen from businness opportunities because they do now have that equipment. (During last weeks presentation they commentated that the September acquisition should triple domestic casing & tubing revenue---which would take it from $2.5M/quarter to $7.5M/quarter) Also, his enthusiasm for the Specialty rental equipment hints at possibilities. He stated that once breakeven is reached, 90% of the next dollar earned goes to EBITDA. Then he discusses how they plan on taking a business that was focused in one location with limited customers (and making great margins) and applying it to their multiple locations and hundreds of customers. Plus, when someone wants to drill & needs to rent equipment it doesn't take much for them to hire the drillers along with it that ALY supplies.

Conclusion: I don't have a specific number or a price target. I just feel there is possibilities of suprise on the upside if the industry stays strong. When oil went down, you can see by the chart that ALY went with it.