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Strategies & Market Trends : Value Investing

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To: Lazarus who wrote (41592)	3/5/2011 2:35:06 PM
From: E_K_S	1 Recommendation Read Replies (2) of 78918

Hi Lazarus- Here is my first take on Seychelle Environmental Technologies, Inc. Re: SEYCHELLE ENVIRONMTL (SYEV.PK) The first thing that popped out for me was their PE of 7. The company is profitable and for 2010 had sales of $4.255 million compared to $2.439 million for 2009. That's a 75% increase YoY so they are definitely in their growth phase. Four customers accounted for 65% of their sales in 2010. I suspect these are large retailers. This is up from 50% in 2009. They are on track to generate $228K in sales from their Web store next year which represents 5% of their total annual sales. I believe this will be a very big and profitable segment of their growth. Their overall net profit margin is around 23%. Based on their 25.88 million shares outstanding, every $1M in sales generates about $0.01/share earnings. In 2010 they earned $0.04/share and based on today's close their PE is around 7. finance.yahoo.com They do sell replaceable water filters which could eventually be a future consumable product but currently I see their product(s) limited to one time "buy" items. Therefore, they really do not have a customer base that are repeat buyers/consumers like with the Armanino Foods product(s). Armanino Foods of Distinction Inc. (AMNF.PK) operates with a 16% net profit margin on $24 million 2010 sales. They are about 5x larger (in sales) than Seychelle and continue to grow their business at double digit rates (about 11% for 2010 vs 17% in 2009). The big question for me is how long and by how much can Seychelle Environmental Technologies, Inc. grow their sales. They booked an incredible 74% growth in sales from 2009 to 2010. This is a cheap stock price now selling at 7 PE. Assume they increase their sales by 50% in 2011 (from $4.255 million to $ 6.38 million) and get recognized by the market and are priced at a 15 PE (only 30% of their growth rate). That type of valuation would price the stock at $0.96/share or make it a 3 bagger from the current price of $0.31/share. I bought several items from their Web site today and am considering starting a tracking position. store.seychelle.com I prefer Armanino Foods of Distinction Inc. (AMNF.PK) with their consistent 5% dividend (43 consecutive payments), expanding profit margins (more efficient facility operation), modest growth rate at 11% (w/ expanding national distribution) and potential for repeat sales (food is a consumable) providing many years of increased growth opportunities. Armanino Foods could even start a Web site to sell gift baskets that would include their new high end cheeses which would further expand their margins through direct sales. In summary - Armanino Foods of Distinction Inc. (AMNF.PK) could see a 40% gain in price next year with my estimate 2012 sales at $23.3 Million generating $0.11/share. If their forward PE reflects their two year growth rate (ie @ 11%) then 2012 price s/b $1.21/share. Seychelle Environmental Technologies, Inc. (SYEV.PK) could be a potential 3 bagger next year. If they increase their 2012 sales by at least 50% to $6.38 million and maintain their current 23% profit margin, they should earn $0.0587/share in 2012. To achieve a 3 bagger status, the market must assign a 17 PE to their earnings which would make their price $1.00/share. Even at a 10 PE the stock should sell for $0.58/share or 89% higher than the current price of $0.31/share. Thats still a very good risk/reward speculation! I can see value in both of these companies. The stock shares of both companies are thinly traded w/ average daily volume around 25K shares. If one is a buyer of shares be sure to use limit order(s) and be patient on your fill. EKS

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