Hi Roy. I think we are going to see anther run here soon. Did you see the cross yesterday?
Also here is something I posted on Stockhouse
In regards to The Arctic Group's market share in the packaged ice
industry.
From my understanding the North American package ice industry & AGP's
current market share can be summarized as follows:
Industry estimated annual wholesale revenues: $2.5 billion U.S.
Arctic Group estimated annual revenues: $20-$25 million canadian.
Based on these numbers the current North American packaged ice market
share held by AGP is only approximately 1%. The vast majority of ice
companies operate as independant, family owned type businesses with
long established, localized market shares. I believe currently the
largest market share (approx. 5% of total packaged ice market & the
largest by far) is held by a company called Suiza Foods. They are a
huge company, grown by acquisition & trade as SZA-NYSE. SZA is
primarily in the dairy business. I think packaged ice sales only
represent about 5% of SZA's total annual revenues. In reading
research reports on SZA, it seems they've discovered the attractive &
stable profit margins enjoyed by packaged ice companies.
Based on these numbers it appears there may be substancial room for
growth & consolidation for companies within this industry. The timing
for an aggressive consolidation could be excellent for an industry as
fragmented & uniquely North American as the packaged ice industry.
The Arctic Group has stated they have very aggressive growth plans and
so far have increased estimated annual revenues by over 400% from the
acquisitions announced, or completed so far. With the markets
crumbling, I think boring, defensive, high growth & earnings stocks
like AGP will suddenly become attractive & maybe even sexy. Remember,
1.) AGP has no business or exposure outside Canada or The United
States
2.) Management has many years of experience & success within the
industry. Even though the CEO of AGP, Robert Nagy has other
successful private business ventures, he still has over 25 years of
"hands on" involvement within the packaged ice business
3.) Businesses they acquire will have existing well established
market shares, not likely to encounter direct competition, or price
wars in their localized market areas served. There's no fancy
trademarks, patents pending, or franchising agreements to deal with
which dramatically inflate goodwill & marketing expenses in the
future. Also with hundreds of potential ice companies to evaluate
for acquisition, they can be very selective.
4.) In good or bad times people will still drink. Maybe more in bad
times. If they're still drinking they may pass on the rather
expensive drinking at establishments & do more at home, or at friends
socializing. Anybody that shows up with a good bottle of booze & no
bag of ice is taking a big chance on having warm drinks. Now we can't
have that.... |
