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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (25517)	1/25/2007 11:04:58 PM
From: E_K_S	Read Replies (3) of 78510

I have been looking at VCP too. I am thinking of starting a new position in this company as they are competitors with ARA. VCP has excellent free flow cash flow, a forward PE of 12 (similar to ARA) and a higher book value that ARA at $11/share (61% of book for VCP vs 38% of book for ARA). They key to maintaining high margins is to fully utilize their plant capacity. ARA recently announced a partnership that achieves a high utilization of their facilities, doubling their output. VCP has spare capacity and may also be looking for such a partner. ARA has higher operating margins because they appear to be operating their facilities more efficiently (20% better than VCP). VCP may be selling at a discount to ARA by $3/share because of their operating inefficiencies. Most of the outstanding shares for VCP are held by institutions. Any thoughts? EKS

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