TJT Inc. (AXLE) is an undervalued special situation. The company remanufactures tires and axles for the manufactured housing industry and has been in business for 19 years and has been profitable for the last nine. The company went public about 15 months ago at $4 a share with a 10 cent warrant. The common climbed to about $9.50 and the warrants peaked at about $5.50. In late January, the company's underwriter and main market maker went out of business and the stock fell to $1 and the warrants fell to $0.125.
What the market has overlooked is that the company has pro forma revenues of about $25 million and pro forma earnings of about $0.13 per share. The balance sheet is pristine and there is no long term debt. At its current stock price, the company is being valued at only about $7 million. The insiders have obviously noticed the fire sale price of the stock and have started buying.
The selling of the stock and warrants has been overdone and at some point in the near future they will return to levels that are more comensurate with the underlying value of the company.
Check out the company's SEC filings and recent press releases to see if you agree with my assessment.
Walt |
