Legitamate question David, The year 2000 comes (11 months from now) and the land deal is done. Say things go down pretty much as outlined in my post.
First let's talk book value. If they have $.74 cash per share, do you still think it will be selling at $.13 if that was a ten PE? Perhaps all those takeover kings that bought the companies with the company's own assets, were not good investors in your opinion? As soon as the first piece of land is sold, this IS a $1 a share.
Let's look at this company. Like the book value or not, after this deal it WILL be ~$1. Half cash by our estimates of the capital property they are going to buy.
With the plant and equipment that they buy, they should be able to triple maybe quadruple their output of lumber with the two sawmills. They should also be able to use their scrap wood to make plywood with the plywood plant. Worth on guesstimate in earnings as much as their present operation. Again, look at the price markup for moldings in the lumber stores and you see that the value added is a good amount for the plant for furniture parts. Say another double on present operations.
So we have,
Sawmills = 3x
Plywood = 1x
moldings = 2x
All together 6x earnings capacity. Remember David, I try to be conservative. How much will the web site bring in? I don't have an estimate, perhaps a consensus of the thread is needed to evaluate that.
If there earnings are $.02 for this year, I would have to say for the year 2000 they would be at the very least, $.12
This is disregarding the web site with its products, and any other opportunities that come up for this VERY AGGRESSIVE, CASH FLUSH, FAST GROWING, EMERGING COMPANY. You want to talk about forward looking revenues, this company is the one. They are positioned in a unique virgin territory, with the know how to exploit it.
So David, I think this company can very conservatively carry a PE of 30. The average for the S&P is 40. Any emerging growth stock carries one much higher.
PE of 30 x $.12 = $3.60 It would be selling at 3x book value and these are very nice sound numbers for any company. I see many that are losing money, are selling at 50x book value with larger share prices.
Now you add in the Internet commerce business and what the company can accomplish with the resources available and put the top on it!!
ANYONE? |
