Lenghty, but you might find this interesting...
This is the write up from Stellar Stocks tonight.
Now on to our September Profile:
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GREAT WHITE MARINE & RECREATION, INC (OTC BB: TGSK)
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There are two things that investors on Wall Street will always pay for: Growth in sales, and growth
in earnings. Great White Marine & Recreation (OTC BB: TGSK) has exploded in both of these areas
over the past two years, and this Company is bound to catch the attention of Wall Street very
soon.
The stock has already caught the attention of Internet Investors. There has been an enormous
volume of postings in "CHAT Rooms " all over the Internet. In Yahoo!'s chat room alone there are
over 27,000 postings on this Company. At siliconinvestor.com there are over 2,600
postings. You should review some of the comments that have been made. For the Yahoo! chat
room, link .to:
messages.yahoo.com
gid=6httor$mmj$4@m2.yahoo.com&type=date&first=1
Another indication that this stock could be positioned for a substantial move to the upside is the
action in the stock on Monday, August 31st. Anyone following the stock market knows that the
Dow was down over 500 points that day, and the Nasdaq was down over 150 points. Despite the
recent bloodbath, Great White Marine (OTC BB: TGSK) was up 7% on Monday, and is only 8%
below its all time high. This is a very strong stock in a market where the average OTC stock is
down 50% from its 52-week high.
Link to 1stnettech.com to get to the Company's corporate web site where you
can learn anything you would want to know about Great White Marine (OTC BB: TGSK). Now, onto
information about the Company's business:
On January 1, 1994, the highly controversial North American Free Trade Agreement (NAFTA) went
into effect. This Agreement eliminated many trade barriers between the US, Mexico, and Canada.
Colin Smith, the President of Great White Marine (OTC BB: TGSK), immediately recognized an
opportunity to position his Company for substantial growth.
Great White Marine (OTC BB: TGSK) distributes an extensive line of yachts, boats, trailers, personal
watercraft, and all terrain vehicles. The Company exports to Mexico, Central America, South
America, and the Caribbean.
Over the past two years this Company has exploded as a result of three factors:
* The NAFTA agreement eliminated tariffs and duties on American products, thereby reducing the
final cost of American goods to Mexican and Canadian citizens.
* The Mexican and Central American economies recovered from the devaluation of the Mexican
currency, and have become very robust.
* Great White Marine (OTC BB: TGSK), has such strong channels of distribution that manufacturers
have awarded them new and exciting product lines which has added tremendous growth.
The net result of these three factors has been substantial growth in both sales and earnings for
Great White Marine (OTC BB: TGSK) over the past three years. We expect the trend to continue.
Here are the numbers, and they are very strong:
1. In 1996, the Company did $5.176 million in revenues. In 1997 the Company did $14.2 million in
revenues. This is a 280% growth rate!!!
2. Through the end of June 1998, Great White (OTC BB: TGSK) did $15.023 million in revenues,
and should finish the year in the $23 to $25 million range, which is a 140% growth rate over
1997!!!!
3. Earnings have grown from $682,000 in 1996, to $1.7 million in 1997, and $1.95 million through
the first six months of 1998. This is the kind of growth that Wall Street loves.
In summary, the Company has grown from $5.176 million in sales in 1996 to what
is likely to be $24 million in 1998. This is an average annual growth rate of 166%.
This is the type of small company you want to own in your growth portfolio.
The Company's financial statements are available by linking to
1stnettech.com, then simply click on Financials.
Now that we've covered the numbers, let's discuss what this could mean to
shareholders from today's levels.
Through the first half of 1998, Great White Marine (OTC BB: TGSK) earned $.248
per share. Companies with 100% plus growth rates generally trade at 30 times
trailing annual earnings. With nearly $.25 in earnings in the first half of the year, it
is fair to assume that the Company will finish the year with at least $.40 in
earnings. Putting a 30 multiple on the stock, you could end up with a $9 stock price
at some point in the future.
At the release of this profile, Great White Marine (OTC BB: TGSK) was trading at
$2.85. A target price of $9 would yield a 315% return to investors from today's
levels.
An investor might ask himself or herself why is this stock trading at these low
levels? We believe that the Company has not yet attracted the attention of Wall
Street. Great White Marine (OTC BB: TGSK) has only traded since January 12th of
this year when the Company was acquired in a merger transaction. It is the purpose
of this newsletter to uncover these types of undiscovered gems and present the
opportunity to our subscribers before Wall Street catches on.
PRODUCTS
Click on 1stnettech.com to see the Company's
product lines.
Great White Marine (OTC BB: TGSK) is not a manufacturer. The Company
purchases their marine and land based recreational products directly from
manufacturers, and distributes to foreign dealers.
Their products can be divided into four categories: Yachts, Outboard Motors, Polaris
ATVs (All Terrain Vehicles) and Personal Watercraft (jet skis and wave runners), and
accessories.
Their yacht sales comprise approximately 31% of their annual revenues, and they
carry five different lines, which include Cruiser (tm), Fisher(tm), Chapparal(tm), Sea
Pro(tm), and Pursuit(tm).
28% of their annual sales are represented by Mercury (tm) products, which include
outboard engines and special outboard motor oil.
The Polaris(tm) line of ATVs and personal watercraft was added in recent years,
and now represents 26% of the Company's annual sales.
The remaining 15% of their annual sales would fall into the category of accessories
such as boat trailers, parts, and life vests.
Future Expansion Plans
In order to fill demand for their products, the Company is in the process of building a new
30,000 square foot facility in Monterrey, Mexico. It is scheduled to open in Mid September,
with offices, a showroom, and a warehouse.
Link to 1stnettech.com to see pictures of the new facility
under construction.
They will also open a direct retail outlet in Puerto Vallarta, Mexico, which will help to
enhance margins.
They will be opening an office in the Miami, Florida area within the next two months. This
office will serve as a distribution point for Polaris (tm) products to the Caribbean, Central
America, and South America.
Now that you understand the Company's business and financial history, let's move on to
our Final Four review. We believe that these categories are the most important for
determining if a stock represents a good investment opportunity. The categories are, in
order of importance: Management, Financial Condition, Market Capitalization, and Industry
Group:
Management
The driving force and architect of the Company is Colin Smith, the President and CEO of
the Great White Marine. Colin Smith started this Company in 1983, and has personally
overseen every aspect of its growth since its inception.
Mr. Smith runs a lean and mean profit machine. Because the Company does not
manufacture, they are in position to lower their overhead during tough economic times.
This reduces risk to shareholders.
The Company probably should add a new Chief Financial Officer to the management team.
They should find a CFO with Wall Street experience and credentials. This Company already
has attained the critical mass it needs to get Wall Street exposure, and could use a CFO
with those types of contacts.
More Wall Street exposure generally means an enhanced trading level for a Company that
has such a strong financial statement.
1stnettech.com will get you to a complete list of the
Company's management along with their biographies.
Financial Condition
The financial condition of Great White Marine is absolutely outstanding. When evaluating
the financial statement of a company, there are two main considerations. First is the
income statement, which measures sales and profits. The second is the balance sheet,
which compares assets to liabilities.
The income statement for the first half of 1998 is fantastic. The Company achieved $15
million in sales, and a net profit of $1.95 million after all overhead and depreciation was
subtracted. This translates into nearly $.25 per share in earnings for the first half of the
year.
The Income Statement is outstanding, but the Balance Sheet looks even better. At the end
of June, Great White Marine (OTC BB: TGSK) had nearly $5.8 million in real, tangible
assets, and only $157,000 in debt. Any accountant will tell you that financially speaking;
this is a very healthy company.
1stnettech.com will get you to the most current financial
statement.
Market Capitalization
According to Great White's most current financial statement, there are 8.4 million shares
issued and outstanding. At $2.85, that means the stock market is currently placing a value
on this Company of approximately $24 million. The Company is on track to make a net
profit of at least $2.5 million this year on revenues of $30 million. Most companies as
profitable as Great White Marine (OTC BB: TGSK) will trade at a minimum of five times
annual sales, or twenty times annual earnings.
At five times annual sales, the stock would be at least $10. At twenty times this year's
estimated earnings, the stock would be at least $7. In either case, a strong argument can
be made that this company's stock price is grossly undervalued.
Industry Group
Placing Great White Marine (OTC BB: TGSK) into a singular group is challenging. There are
no other public companies that compare precisely. Travis Boats and Motors (Nasdaq:
TRVS) is a multi state super store for marine equipment which trades at about 20 times
trailing earnings. If Great White were trading at 20X trailing earnings, the stock would be
valued at about $6.
There are no publicly traded marine equipment and yacht distribution companies. Perhaps
when Wall Street identifies the category this Company fits into, the stock will trade at a
value that reflects the financial record of the Company.
Conclusion
There is one additional bonus to being a shareholder of Great White Marine (OTC BB:
TGSK). The Company is in the process of filing a "Rights" offering with the Securities and
Exchange Commission. Once approved, each shareholder will have the opportunity to
purchase one "Right" for $5 for every 10 shares of stock that are owned. The Right
contains one share of preferred stock, and three warrants which convert into common
stock at $8, $12, and $16. This is a very complex security, but it can only benefit existing
shareholders. Eventually, there will be more shares issued by the Company, but they will be
issued at much higher prices than where the stock is trading today. As a shareholder, you
have no obligation to purchase this right once it becomes available. However, if you don't,
someone else can. This "Right" is a non-dilutive security that allows the Company to raise
capital for expansion without hurting the existing shareholders. If you wish to listen to a
replay of a c
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In summary, the stock of Great White Marine (OTC BB: TGSK) is grossly undervalued by
any standards, growing substantially, receiving enormous coverage by Internet Investors,
has traded beautifully in the recent market correction, and is issuing a Rights offering to
benefit shareholders. This looks like an excellent growth situation for investors looking for
outstanding upside potential.
If you wish to be kept immediately up to date on important information that becomes
available on Great White Marine and Recreation (OTC BB: TGSK), click on
1stnettech.com and sign the guest book. Information on
the Company will then become automatically E-Mailed to you. |
