PDG Environmental, Inc.
Dear StocksNetwork Subscribers:
This week's stock picks is PDGE. Ranking number 3 in a $3.5 Billion industry is very impressive. What's more impressive is PDGE's aggressive acquisition strategy and earnings growth. Third quarter profits were up 400% and the contract Backlog vaulted to $17.4 million. PDGE has announced two acquisitions which could increase revenues 65% to $40 - $45 million and earnings to $0.20/share. PDGE is aggressively seeking more acquisitions and should show dramatic growth. When looking at the gross revenues, projected profits, and relatively small share price of $.75/share makes PDGE a very attractive buy. The KonLin Letter has issued a Strong Buy recommendation on PDGE stating," PDGE is now mean and lean due to its successful restructuring and is on the verge of achieving a dramatic earnings rebound in coming quarters, making it an aggressive Buy situation for a 1st objective of $3 - $4 and an ultimate target of $6 - $7."
KonLin Report from December -
THE KonLin Letter
For a cmplete profile on PDGE please visit www.stocksnetwork.com/profiles/pdge.htm
IMPORTANT POINTS
1-Volume has been surging lately
2-Featured Stock in the Konlin Report for paid subscribers only
konlin.com
3-PDG Environmental, inc., is the country's 3rd largest asbestos
abatement contractor in the country, as reported by Engineering News Record in
the October 11, 1999 issue.
PDG Environmental, Inc
Ticker: PDGE
Price as of 3/3/2000: $0.93
52 Week High/Low: $0.375-$1.46
Shares Outstanding: 8.5M
Market Cap: $5.8M
Estimated Float: 5M
FEATURED STOCK OF THE WEEK
PDG ENVIRONMENTAL, INC.
OTCBB - PDGE
PDGE has emerged as the third largest asbestos abatement removal company in the U.S. and recently signed a letter of intent for Metalclad's Insulation Subsidiary, which will diversify the company's revenue base. The health risks of exposure to airborne asbestos are well documented and include responsibility for certain diseases including some forms of cancer. Accordingly, the EPA has banned the use of asbestos in construction. Equally well known are the liabilities that manufacturers of asbestos products face and the potential liabilities of building owners and facility managers who do not eliminate asbestos hazards. PDGE is engaged in providing asbestos abatement for commercial, industrial, and public facilities, which includes removal and disposal, enclosure (constructing structures around asbestos-containing area), and encapsulation (spraying asbestos containing materials with an approved sealant)
PDGE recently signed a letter of intent to acquire Metalclad's Insulation (MI) Subsidiary, which performs industrial insulation contracting in southern California (revenues for FY'99 were approx. $12 mil.). PDGE is acquiring MI for stock and warrants and upon completion of the sale, Metalclad will own approx. 29% of PDGE's outstanding shares. Assuming exercise of the PDGE warrants, Metalclad will increase its ownership to 48% of PDGE common stock. This is a very exciting acquisition that offers tremendous future growth potential to PDGE. MI provides diversification for PDGE's asbestos abatement services and gives the company an established presence in the vast California market. In addition, a number of PDGE's existing locations are a prime target for geographical expansion of MI insulation services, which has been growing in excess of 20% per year.
It is expected that the acquisition of Metalclad will be immediately accredited to earnings while strengthening its balance sheet as shareholder equity will be in excess of $6 mil. with $4.8 mil. in working capital and minimal debt, The additional capital that may be realized through the exercise of the warrants will further enhance PDGE's growth and diversification strategies. PDGE's backlog continues to gain momentum with the announcement of $5.3 mil. in contracts.
Revenues for FY'99 leaped to $36.8 mil., with net income per share jumping to .14 vs .05 for the prior year. Revenues for the 1st half of FY'00 declined (up over 50% from 1Q) to $13 mil. and, due to delayed starts on several significant projects and a one-time settlement charge, a loss of (.04) per share was reported vs .13 for the same period in the prior year. The first half was disappointing and broke a string of profitable quarters for 2 1/2 years sending the stock plunging to 1/4. The company is financially sound with sufficient working capital and backlog increasing daily. Of the 8,388,000 shares outstanding, insiders bold approx. 31.9%.
Initially recommended at 5/8, the stock vaulted to 2 1/4. for a 490% gain just short of our 1st target of 3. It was recently hammered down to an unrealistic price of 1/4 as sentiment increasingly grew bearish due to investors who unfortunately panicked upon hearing misleading statements on the internet and the temporary 1Q setback. However, the stock recently punched up through its bullish 30-WK MA and broke through its long-term downtrend line signaling an aggressive buy signal to challenge its previous high with a 1st objective of 3-4. The stock today is a much better buy than previously recommended since the company strategically changed its product mix, maintains a strong balance sheet, and should earn .20 per share for the next FY with $40-$45 mil. in revenue.
As one of the top three leading providers of asbestos abatement, PDGE is aggressively on the acquisition trail, diversifying their core business with industrial insulation services (growing in excess of 20% per year). PDGE is now mean and lean due to its successful strategic restructuring and is on the verge of achieving a dramatic earnings rebound in coming quarters, making it an aggressive buy situation for an ultimate target of 6-7.
FOR FURTHER INFORMATION CALL 1-800-324-8246.
KON-LIN RESEARCH & ANALYSIS CORP., 5 WATER ROAD, ROCKY POINT, N.Y. 11778 -
(631) 744-8536
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