Looking back at my 1997 initial post on ARCI, it's clear I underestimated the timeframe for turnaround.
My main mistake was failing to understand the effect on retail margins of switching from reconditioned appliance sales to resale of Whirlpool "scratch and dent" units, which, although they are much faster movers, are lower margin.
Now that the retail mix is 75%+ resale, retail margins should be relatively stable or growing. This, along with current recycling contracts, should mean that my 1997/1998 earnings projection is likely to come to fruition in 2000.
One thing that bothers me is the recycling contracts, though. I wish ARCI could get long-term contracts which wouldn't need annual renewal.
Oh well. With revenues of $7 per share, and earnings of $1.1M+, or $0.50 per share in 2000, I hope all those who were scared/exhausted out of ARCI a few years ago will come back, and that Piper Jaffray? will reinitiate coverage. I think PJ was covering ARCI back in 1995/96, or was it someone else? I threw out my 1995/1996 investor packets, so I'm not sure.
Hope CEO Ed is working on getting coverage again. We need it. Where else can you find a growing company making the turnaround selling for only 1-2 times forward earnings? This looks like an easy 5-bagger from $1 this year, and a 10-bagger from last year's low of $0.50, and from $1 by sometime in 2001 if ARCI keeps all cylinders firing.
I hope ARCI renews its retail expansion by buying profitable competing stores and bringing them into the network, by using a higher stock price as currency, of course. I'd also like to see some insider buying. |
