Hi, thanks for the numbers. That's exactly what I'm trying to do... grabbling with price valuation and stock potential. I've learnt my lesson once buying a "hot stock" micro-cap tech company just after an article was published in Investor's Digest. After a month of up and down frenzy , the stock plunged and stayed at 1/3 of buying price. Even today, the company's technology makes sense (in sync with the times), its business is progressing, but it is taking an awful amount of time for the revenue base to grow. I still hold the stock (still languishing, but more hopeful) but wished I had not rushed in madly during the volatile period.
Coming back to price valuation as new investors see the stock. For the current fiscal year, let's say we'll see total revenue of about $3 million ($2 mill Mexican contract plus the $1 mill already on the books) and say, let's take your estimate of $9 million next fiscal year. This would come in at $2.70 to $3.00 a share valuation based on 7.5 times market cap would be reasonable. Canaccord 15 times valuation would be too high. 7.5 times may still be high, since if I recall, as a rule-of-thumb the maximum valuation is 5 times revenue. Of course this takes into consideration only the Mexican deal, and not any Japan or Korean deals materializing. If these Asian deals materialize, then the target price is of course higher.
As far as the UK marketing deal, I'm not sure that it will turn out to be a piece of cake. From the postings it seems that there is a already a formidable Italian competitor doing the same thing as AFS in Europe.
As far as the catalytic convertor goes, it is unclear. The invention is still very young to assess how well it can generate revenue.
As far as the "baby ballard" sticker, it doesn't appear that AFS is in the same technological level as Ballard to command a "blind" market cap. Ballard is a completely new propellant technology, whereas, AFS is fuel switching. OTOH, with proper marketing and distributorship channels, the fuel-switching technology could turn out to be a profitable business and one solution to "zero emission" standards.
I don't mean to be a wet blanket to this thread. Look at the bright side, it may bring a balanced diet of caution to those who may be thinking of mortgaging their house for this "sure thing" of untold wealth. As for me personally the story is compelling enough to take a long position as soon as I get a feel of the support level.
What did analysts write about the potential of this stock? All comments are welcomed. |
