APCO UPDATE............
Now that almost everyone has decided that this is a good area to buy more APCO. I thought I would post some of the amigo's thoughts as to why it is a good buy. Some are old, some are new. Of course these are our thoughts and not a recomendation to buy. As always thoughts, ideas or discussion are welcome.
This company has rock solid fundamentals. For the last four quarters APCO has increased revenues 40%, 34% 45% and 28%. In the last conference call, Mr. Dorfman said that he expected APCO to continue increasing revenues 25% to 30% over the next 3 to 4 years! In addition to the increasing revenues, he stated that APCO has demonstrated that they were able to maintain the overhead at the same level of the previous quarters and anticipates being able to keep it there for the foreseeable future. They anticipate being able to maintain the current margins of approximately 21%.
The company is basically debt free and has close to $25 million in cash ! Two insiders own 8% of the stock respectively and each recently exercised options to purchase an additional 173,000 shares. They recently gave a presentation at the microcap conference which was awarded to the top 50 companies out of approximately 450 companies. The recent exclusive deals with Sonic and Kelly dealerships not only give them a great source of new revenue, they also give them great exposure in two of the top 40 dealerships in the United States. The recreational warranty business is continuing to grow and they are very pleased with it's progress.
Last quarter they added exclusive deals with Allstate and Bank One. The potential revenue from these are huge! Allstate has over 8 million clients that have vehicles that qualify for the warranty program The numbers for Bank One are mind boggling. They have access to over 17,000 dealerships and do close to 80% of the financing business for franchise dealerships. They have close relationships with over 3,000 dealerships. Bank One has been doing a pilot program for the last year and it has been extremely successful. APCO is looking for them to exceed the 15% of their revenues that the EasyCare Certified program is doing now. Both of these programs are in the very early stages. APCO is looking for them to greatly impact the numbers starting in the fourth quarter of this year. We believe that the impact will more than likely start in the third quarter.
We are looking for APCO to implement at least the following within the next quarter. Sonic and Kelly to continue to sign new dealerships, a new EasyCare Standard program, a partnership agreement to sell warranties to independent dealers and additional new analyst coverage. The EasyCare Standard program should generate a large portion of revenue. This plan was designed to give the dealerships that didn't want to sell a more costly premium plan something less costly with less coverage's to sell. The response has been very favorable from dealerships that they have already presented to, let alone new dealerships. The independent dealerships are responsible for 1/3 of the 7 Billion dollar industry. 10% of those dealers are what would be considered good candidates for the program. Another great source of revenue. Based on existing operations and future prospects we look for APCO to be at $18+ by years end.
All of the above has contributed to APCO being noticed in the investment community. There has been increased institutional interest and they were featured in the New America section of Investor's Business Daily
APCO sells and administers extended vehicle service contracts and extended vehicle warranty programs sold primarily by new and used automobile dealers and distributors. APCO also provides third party administration and insurance brokerage services.
APCO, established in 1984, and its subsidiary, The Aegis Group, Inc., are leading marketers and administrators of products and services to automobile and recreational vehicle dealers which are designed to enhance customer satisfaction and dealership profitability. The Company's core business is the marketing and administration of the EasyCare(R) Certified Pre-Owned Vehicle Program, Vehicle Service Contracts and Recreational Vehicle Service Contracts.
Cary |
