AF..
I heard about this company a little over a year ago. I know somebody who sells lumber to companies like Furrows(a PCSH owned company) and their competitors. He had acquired a ton of shares when they were reorganizing, something like 105,000 at .06 average price. Around December 1997, they did a 100 to 1 reverse split when it was .02 and it killed him. They had millions of dollars in expenses for this reorganization that were carried into 1998. Unfortunately, their problems went unchecked for years while their competitors were growing and taking peices of their customer base. It is now a very competitive market for them. Look at the recent growth of Lowes and Home Depot.
The good news is that they closed a bunch of nonperforming stores at the end of 1997 as a part of the reorganization. It hurt their fourth quarter financials because they did loose the revenue that they normally generated coupled with those reorganization costs. But, they were positioning themselves for a better future. They also got rid of the old board and I believe the CEO during this time. These people had burnt a lot of bridges which subsequently has effected their ability to do a quicker turn around. Another good thing is that they still maintain a book value of $8.07 for their stock. It looks like they are starting to show a profit and have been paying off some of their long term debt.
As for their recent activity, I was pretty confused myself. I did come across the following post on another thread about this activity:
"about a month ago their local home paper, the Kansas City Star (on line at www.kcstar.com) reported a rumor that Leonard Green, who owns Builders Sq. and Heckingers, was accumulating the stock with the aim of a takeover. THAT may be the thing moving the stock."
This is something I have thought this company was a good play for. It seems to be a prime candidate for a merger or take-over. I don't know what your cost per share is, or how you managed to inherit them, but I firmly believe that this company is on the right track. I think, in the near future (within a year), we will see a return to the $5 to $6 price range. Long term, not so sure, but I do see some very good potential here. Keep in mind that this past year has been a terrible year for this industry. My friend tells me that sales are down everywhere. He does say that the industry expects a turn around this year. A lot of the wholesalers have been reorganizing and streamlining their operations this past year (Same thing PCSH did in 1997) and he thinks 1999 will be a good year for the industry.
As for me, I have watched this thing closely this past year. It is a great stock for short term plays. It frequently bounces between $1.50 and $2.50 price range. Though I am not generally this type of investor, it is pretty easy to jump in and out on this action for 60%-150% profits. I am currently hoping for another dip below $2 to get in again. I plan to purchase a substantial amount of shares then and play it out. I will probably sell half at the $4 range and eliminate all risk, then let it ride. I am pretty confident that the stock is close to an end of these low prices and we will start seeing some substantial increases soon.
Sorry for the length of this. I probably told you more than you cared to hear. But thanks for listening.
Good luck.
Bob |
