Undervalued Dog, Volume 3, No. 8, March 2, 1998
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Firamada Inc. (OTC BB, FAMH)
Recent Price: $0.29-0.31/share
Daily Average Volume: 450 K
97 EPS: $0.11/share (estimated)*
97 PE:3
Industry Average PE:59.07 (Thomson Report)
Estimated 1998 EPS:$0.32/share
Trailing PE:1
Book value$1.32/share (estimated)**
Price/Book:0.23
Industry Average of Price/Book:6.89
Div/Shr: None
Yield: None
52-week Range: $0.09-1.25/share
Shares Outstanding: 40 M
Floating Shares: 12 M
Profit Margin: 25-30%
1997 revenues: $8.5 M
Estimated 1998 revenues: $60 M
SEC filing:imminent
* EPS may vary due to charge incurred from the acquisitions and change in average number of outstanding shares.
** Book value may vary due to the acquisitions.
FAMH is very bullish. Tendencies for prices to continue advancing are extreme at 90-95% with a short term (1-6 months) upside potential of $2.50 and a long term (12-24 months) upside potential of $6.50. Buy under $1.25.
BUSINESS SUMMARY AND CORPORATION BACKGROUND: FAMH is a temporary staffing company. They currently have offices in seven cities, including New York City, Phoenix, Miami, Dallas, Houston, Long Beach, CA and Rolla, MO. Since these offices were acquired by FAMH, they operate under the following names Encompass Staffing, Success Staffing, Royalty Staffing, or Myriad Employment. FAMH is completing an acquisition of Myriad Employment, a private employee leasing company that operates in California and Utah. Myriad did approximately $45-50 Million in revenue for 1997. FAMH clients include Colonia Insurance Company, Coca-Cola Merchandising - Phoenix, AIG Insurance, Republic National Bank, Tokyo Marine, Arizona State University and Arizona Cardinals Football Team (through Finehost), The Phoenix Suns Basketball Team and The Phoenix Coyotes Hockey Team (through Restrua), Auto Zone, BF Goodrich Tire Company, Goodyear Tire & Rubber, Hilton Hotels, 1-800-FLOWERS, and General Electric. T!
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o facilitate growth by acquisition, FAMH has obtained a $12 Million line of credit from Bristol Asset Management of Los Angeles, CA. This investment group has given FAMH the opportunity to form additional strategic alliances to move the company through the millennium. The amount of this credit line is same as the market cap of FAMH, demonstrating that FAMH has a sound business plan, strong cash flow and solid balance sheet.
RECENT DEVELOPMENT AND ANALYSIS: Since contract employee or temporary staffing is crucial in all businesses in order to control costs in an increasingly competitive business environment, many companies and even governments are increasingly using temporary staffing for their projects and businesses. In the issue of the Kiplinger Letter of Nov. 14, 1997, it stated Labor shortages will remain a big headache, with many managers particularly worried about the lack of qualified help. More firms will hire temps and lease workers,... a booming business. Let's managers concentrate on their core business while outside outfits handle the hiring, firing, payroll, insurance and job training chores". On January 12, 1998, Mary Mosquera, an industry analyst at TechWeb, stated that The shortage of skilled high-tech workers is so urgent that the Clinton administration announced Monday it will help train more computer programmers and other technical workers. The Labor Department has project!
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ed that the United States will need 1.3 million more computer scientists, engineers, systems analysts, and computer programmers between 1996 and 2006, calling it 'America's new deficit . Temporary staffing has become a star industry and will continue for years to come.
Technique analysis of FAMH chart indicates that a price base at the area of $0.26-0.30 has been established during the past five months with a solid support after breaking away its rounding bottom last September. Resistance to the price rising was apparent at the area of $0.35, it might be caused by the increased number of floating shares from 7 million shares to 12 million shares during the past five months for the acquisitions, the fact that FAMH is a non-reporting company, or inexperience of FAMH management in handling investor relationship, though these acquisitions will add substantial earnings for years to come. An unusual good sign is that very active trading during the past five months has gradually improved and solidified the base of stock price, suggesting long-term uprising of the stock price on the horizon. We reason that the shares have been well absorbed by institutional investors, individual investors with knowledge in the industry, or insiders, who are often!
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long-term shareholders. Furthermore, FAMH just announced its Board of Directors has unanimously authorized corporate management to initiate a buy-back of up to 4 Million shares of common stock through a Repurchase Program. This buy-back of the Company's common stock would reduce the public float, and would equal nearly 10% of the total outstanding shares and 33.3% of floating shares. It is a strong indication of the Company's confidence in the current growth-through-acquisition strategy and strong cash flow. The management believes that they are rapidly establishing a record of consistent growth through aggressive acquisition. This buy-back returns shares to their treasury for pennies-on-the-dollar value. From the Company's point of view, based on current revenues and projected growth for 1998, this re-purchase of common stock is a tremendous bargain. These developments may eventually reduce the number of tradable shares in the open market to a level of 3-4 million sha!
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res. FAMH has conference calls very often, keeping investors well informed about what the company is doing and what the management is thinking. We have been following many OTC BB companies for years, we have never seen this kind of attitude that FAMH has toward small investors. This easily makes FAMH stock a solid play, because their shareholders confidence is much less shakable than shareholders of other OTC BB stocks. Heavy trading ( more than 2 million shares) during the past two sessions provides momentum for long-term uprising of the stock price.
With the strong management already in place at FAMH led by Arif Adam, CEO, and Ira Monas, President, they have taken the plunge into the information technology marketplace by bringing in Elaine A. Zei as Vice President of the Information Technology division. Ms. Zei brings to FAMH more than 13 years of experience in the temporary, permanent placement and information technology marketplace. Her focus in the past has been on middle to upper management placement. The management presented three top priorities for the company now. First, they intend to grow the company by actively acquiring other profitable companies. Second, they intend to increase profit margin by entering information technology staffing (please read this article at sireport.com ). Third, they intend to enhance shareholder values by becoming a reporting company as soon as possible, initiating a stock buy-back plan, and preparing to list FAMH in NASDAQ. We are impressed tha!
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t the management has often found a way to improve profit margin, a key to success in a low-tech industry. FAMH has about 25% net profit margin that easily makes it outstanding among all its peers (3-20% profit margin). We strongly believe that the release of the audited financials will raise the statue of FAMH as high as its peers such as ASF (NYSE), STAF (NASDAQ), and SOSS (NASDAQ) in eyes of Wall Street. The release of the companys financials is imminent. With these recent developments, we conclude that FAMH is ready to become a major player in the industry of temporary staffing. FAMH is an ideal stock for both short-term and long-term gains.
Contact:
Firamada, Inc.
40 Wall Street, 32nd Floor
New York, NY 10005
TEL: 212-425-2168 or 888-831-2442
CEO: Arif Adam and President: Ira A Monas
PR FIRM: Preferred Financial Marketing 310-789-1132
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STATEMENT OF DISCLAIMER: The information presented in the Undervalued Dog is not an offer to buy or sell securities referred to herein. By no means is the above company information complete. One should obtain financial statements and a full due diligence package, including chronological news releases, from this company prior to reaching any investment decision. One should also use the full battery of available technical analysis, including stock charts, moving averages, etc. and consult a licensed financial advisor for an independent opinion. The Undervalued Dog is not in the financial advisory business. The Undervalued Dog is not responsible for the outcome of anyone's investment decision.
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