The net tangible book value including the above transactions minus $7 million in Goodwill equal around $77,000,000.00
Cash/sh equals $25.00 & assume book value is around $45.00
SHARES OUTSTANDING FULLY DILUTED 1.7 MILLION
Continental Materials Corp (CUO~$19)
Continental Materials Corp The recent sale of substantially all the assets of Transit Mix Concrete, a leading supplier of building materials in Colorado for approximately $27 million.
The company is retaining its building supply and aggregates businesses in Colorado, which will be rebranded as Castle Rebar and Castle Aggregates.
The other subsidiaries are in industrial and residential heating and cooling manufacturing, commercial and door distribution and manufacturing.
The head count will be reduced from 590 to 420 because of the sale of their concrete business.
The remaining divisions have revenues of around $100,000,000.00. According to management, monies from the settled lawsuit($15 mil ) & sale of division ($27m ) will look to invest in US based manufacturing businesses.
If you would like to see the complete breakdown of revenue from each sub we suggest that you review the last 10K and the 9 months Q either located on their website ( http://continental-materials.com ). www.sec.gov or www.otcmarkets.com.
IT SHOULD BE NOTED THAT RECENTLY THE DIVISION SOLD WAS NOT PROFITABLE WHILE THE REMAIN ING DIVISION HAD ATTRACTIVE PROFITS.
The recent 9 months ending Sept 30, 2018 had combined revenue of around $121 million, but lost $3.00/sh. If you look at the number carefully you will see that $6.7 million lost was a non-cash event and in reality a line item . If this item had not been realized the company would have lost only .23 before the benefit for income taxes of $1.8 million. . The benefit created an income/sh of .82.
CUO has a huge cash horde for 1 or more acquisitions that will lead this company in the future.
At present there are only 1.7 million shares outstanding and management owns 81% so this stock is very thin and the public can own a serious portion of the company with a tiny position. This company has been around since the 50's and one can only assume that it has gone thru many transformations.
Of course this stock is not for everyone especially if you are a FANG player or dream about TSLA and their subsidized vehicles ( you and I help pay for these so-called marvels ) or even AAPL that might be considered a 1 trick pony that has a bank roll of only $285,000,000,000.00!!
CUO in our opinion is a text book example of an extreme discounted value play that is thinly traded and might be considered volatile. We love these obscure stock plays because when the herd decides to graze in our pastures fireworks usually prevail.
Let us look at some fundamental variables:
1. P (price)/B(book) our current price is $19 and our book value taking into account the $42 million in cash and other assets equals $45. This gives us a value of .4! Traditionally, any value under 1 , is considered a good P/B value, indicating a potentially undervalued stock. Some value investors often consider stocks with a P/B value under 3. If we had a value of 1 our stock would be $45/sh and a P/B at 3X would equal $135/sh.
Let us look at PSR with regards to CUO. We are going to subtract the division sold and only assume the revenue from the remaining divisions which equal around $100,000,000.00. The current market cap of CUO ( share price X shares outstanding 1.7 million) equals $32 million. Our calculated PSR equals .3 and a value of 1 in very undervalued. Our value indicates a severely discounted value. If CUO had a value of 1,then our share price could be $5700.
If we assigned a 2X cash value/sh and we use the $25.00/sh reality then the share price could be $50.00 instead of $19.
At present it is hard to formulate a PE ratio and because of that we give the stock a slight "ding"!
When we look at retained earnings compared to total assets we again calculate a very strong and enticing statistic. For the 9 months ending Sept 30, 2018 the total asset equaled $82 million and the retained earnings equaled $62 million . The formula is R/TA and our calculations equaled 20% which indicates a very very strong company.
It should be noted that as of March 2018 (page 12 of 2017 10k ) management believed that their 4 divisions were worth $41.00/sh. A lot has changed since then, especially during the past month when they were awarded $15 mil settlement and sale of division for $27 mil. All of these transactions will show up in the 1st Q of 2019 ending March 30, 2019.
Note: A fair amount of insider buying took place during the month of Dec 2018.
Overview: We know that many of you will find this stock as too thinly traded and just plain boring. Most would prefer to buy some garbage "tech stock" that has small revenues and know real value except for the perception that company xyz is going to change the world. You would pay $20, $30 or even $40 for a pipe-dream, a unicorn or some other pot-of-gold at the end of the rainbow (has climate change taken rainbows away as well?).
This is a cheap stock with huge upside potential near term as well as long term. Any way you slice, dice or chop CUO is a screaming buy at current levels and when the gazing herd meander over to new pastures there actual will be a pot-of-gold at the end of this rainbow regardless of the temperature.
PS: The stock is $19.00 and they will have $25.00/sh in cash soon so you get the $100,000,000.00 revenue based company for FREE AND WILL HAVE A BOOK VALUE OF $45.00/SH
1.AAPL~ Of course, a great company that is the envy of much of corporate America. From a computer company that could barely crack 5% of computer sales back in the day. Today a behemoth in the "smartphone" market (Samsung the largest) that has contributed to the many advances in computing, communicating and entertaining the consumer worldwide. As the markets worldwide have become more saturated AAPL needs a backup plan.Their phones were once $600 now with additional bells and whistles their phones can approach $1100.00. The Chinese market was and may still be a fertile play ground for their products, but now the Chinese are producing their own phones that may equal or even surpass functionality for 1/2 the price! With a slowing economy worldwide too boot and much slower growth in China and even India AAPL must either conform or create the next game changer.
The company has over $285 billion in cash and most likely the company will continue to increase the dividend as well as buyback shares as it figures out how too deal with the changing environment. AAPL has the option to buy many opportunities that exist in the market place in order to diversify so as to increase lagging sales and profits. I assume that they have been working on AR (Augmented Reality).
( Augmented reality~ a technology that superimposes a computer-generated image on a user's view of the real world, thus providing a composite view. )
The AR market is anticipated to grow to a whopping $61 billion by the year 2023!
We have advanced from mainframe to workstation to desktop to tablet to smartphone and the next platform will be the smart glasses. Not only for the consumer angle but also the Enterprise angle, which is the business aspect. This is most likely AAPL's next game changer. All of the AAPL addicts will flock like a swarm of locust to their AR product. There is not that much information from AAPL concerning this area of development, but in our opinion, they should acquire VUZI . VUZI is a forefront leader in this technology and has products for the consumer as well for the Enterprise angle. The problem with VUZI is a solution for AAPL.
AAPL has more money that "GOD" and could easily offer a substantial premium over the current price of $4.30. VUZI has winning accolades year after year at the CES in Vegas for the past number of years. The problem with VUZI is that they always need money! They have product on the market for the consumer and contractual agreements with a number of large technology companies worldwide. The problem with VUZI is that they always need money! Maybe not today, but within the next few quarters they will be back to the trough looking for money. They really are a leader in this industrial segment, but needs for serious money in order to really expand their products and grow market share. It is a perfect fit and if AAPL paid $15.00/sh with 28mil shares outstanding the amount would only be a drop in the bucket ($420 mil). If AAPL did not want to spend the cash it could easily use its stock (2.5 million shares of AAPL @ $15.00/sh of VUZI). Mr Cook please think about it!
AAPL is trading at $166 & looks attractive when you consider it just made a 52 week low. The premium has been rung out of its shares. We would rate AAPL with a buy recommendation at current levels for long term appreciation.
VUZI is also trading at its 52 week low ( $4.30) It also looks attractive at current levels for buyout potential as well as unicorn contracts that could appear at any moment in time and drive depressed shares higher.
A youtube channel that investor's might consider reviewing daily for other possible investment opps. https://youtu.be/KQU5pMEI30A
WE MAY BUY, SELL AND OR HOLD AT OUR OWN DISCRETION .We currently own shares in CVM and have been hired for PR for 1 year .We wish to give credit to First Genesis Consulting for some their material that was used within this report
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