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Steve, there are stocks out there that are perfect to day-trade, some are perfect to short, some are perfect to trade on technicals---KNIC IS NONE OF THEM.
You are cheating yourself if you day-trade Knic. The time is ripe for massive accumulation of Knic--plain and simple. Its held down artificially by a bunch of pirates recruited by Shoreline Pacific, but we have to look beyond and continue to buy at these depressed levels, because when the pirates are finished Feb 9th or maybe sooner, the stock will take no more than 5 trading days to return above $12/share. So why fiddle around with 1/8 and 1/4 moves?
There is no current research coverage, so no "official" estimates. My estimate for the 4th q is: revenues $24.5M
Net Inc. 4.1M
EPS $.24
Estimate FY 1997 Revenues $134.3M
Net Inc. 25.9M
EPS $1.35
4th quarter numbers will be affected by appx. $850,000 in acquisition and Private placement related costs, but offset by a lower tax rate for the 4thq( Krasner group has tax loss carryforwards and Georgtown has some tax credits that will be applied in the 4thQ) Therefore Knic's tax rate will be reduced from its usual 40% to 27% in the 4th Q. The lower tax base should continue thoughout FY 1997 and 1998.
THE LOWER TAX SAVES KNIC ABOUT .04 IN EPS IN THE 4TH Q.
FY 1997 estimates should be easily exceeded, mostly because 5 new programs should contribute significantly to earnings. Also, one must be cognizant of the fact that mgt's statements of $80M in rev for 1997 is based as if all the acquisitions were made jan/96, therefore growth should be a big determinant. Mgt is also:
1) Increasing jewely prices by 10-15%, reducing much redundent overhead and reaching new international markets in 1997. Markets that were not possible in 1995 or 1996 because of the severe under-capitalized nature of those businesses.
2) Increasing advertising budget of Georgetown by 200%
Juan, I also applaud for your tireless research efforts. Great article. Kind off scary also, don't you think?
An exposive year awaits us. The offshore pirates may get us now, but the Feds will get them later. Thanks to the Barron's article.
Ciao
TOM |
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