Check out this analysis of CHLR from www.pennystock.com:
CHANCELLOR CORPORATION (OTCBB: CHLR) - 68¢. Twelve-month hi-low has been $1.34 - 16¢. Headquartered in Boston, Massachusetts, this leasing company has 43.3 million shares outstanding, of which over 60% are owned by Vestex Capital, $32.6 million in assets and no long-term debt, although there are $25.4 million in liabilities. Web site is www.chancellorcorp.com.
Upon first hearing about Chancellor we had to blink two or three times. We know that the Street (once again, whoever they are) has been shunning leasing companies, and for good reason, but overlooking Chancellor appears to be sheer negligence. Yes, up until 18 months ago, the company had been ailing for ten years, but it has been profitable for six straight quarters and recent revenue growth has been amazing. If this isn't a turnaround situation and a candidate for a NASDAQ or AMEX listing, we don't know what is.
There is nothing sexy here. Chancellor is a fleet management and transportation equipment leasing firm. Under new management since early 1997, the company originates equipment leases and resells them to investors, who receive certain tax and economic benefits. The company manages most of the leases it sells, and then remarkets the equipment when the leases expire. Most of Chancellor's leases involve transportation equipment, although the company also works with materials-handling and construction equipment. Many of its clients have been Fortune 500 companies including Chrysler, Ford, Phillips, Dow Chemical, Coors, Shell, Texaco, and Wal-Mart.
Accelerating Chancellor's growth has been a new technique called "Wholesale-Plus" lease pricing strategy and Total Holding Cost, the concept of acquiring several equipment portfolios, which enables customers to reduce their total lease expense. To expand the retail segment of this business, Chancellor is planning to develop or acquire 15 to 20 retail sales centers over the next three to five years. The company has already made strides in this direction by purchasing the Tomahawk Companies with their five centers last fall. CHLR is also planning to enter international markets by first delving into South Africa.
Although we are always leery of placing Bulletin Board stocks in the Newsletter Portfolio, the numbers on Chancellor seem to point to a turnaround and a future NASDAQ or AMEX listing. During 1998, revenues were $29.6 million with $850,000 in profits versus FY97 revenue of $4.4 million and $1.8 million in losses (yes, you read that right). The 1st Quarter of FY99 is even more mind-numbing with $13.39 million in revenues and $127,000 in profits, an 1860% revenue increase over the same period a year ago, which saw only $682,000 in revenue and $27,000 in profits.
From all that is visible, if there is such an animal as a low-risk penny stock, then this is it.
Our 18-month target on share price is $1.50 to $2.25. |
