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Microcap & Penny Stocks : ccam -- Ignore unavailable to you. Want to Upgrade?

To: Crossy who wrote (12)	7/12/2001 1:34:56 PM
From: Crossy	Read Replies (1) \| Respond to of 85

Ok, after this strong positive earnings surprise I had a really pleasant conversation with Mr. Ira Berman, the chairman of CCA Industries. It's tone further strengthened my view of the company, it even changed my own perception of the ultimate value, CCA may be able to attain. Ok, the "secret" behind CCA's top notch year so far is that they now rely less on promotion and more on advertising. This enables the company to forego cutthroat competition and actually replace additional gross margin percentage points with fixed advertising $$$. As sales expand, this gives sort of a leverage effect, enabling EPS numbers to outpace sales percentage growth. Then a clarification seems to be warranted: this quarter, CCA Industries had an EPS of $0.16 but -- this is AFTER TAX (42% standard rate) because CCAM doesn't have operating loss carryforwards. Very important point for the future on sustainability. He further commented that CCAM never did projections but maintained that he wouldn't expect CCAM to make any quarter with losses in the current fiscal year. (means we have at least 0.21 eps to post for the whole period - the number of the first 6 months so far) I asked Mr. Berman about typical valuation in the cosmetics industry and got the following response: typically the INTRINSIC value of developed brands is 2.5-3x sales. The subtext of the earnings release listed many of CCA's brands as top-performers in their respective groups. On current sales (TTM) of more than $40m, CCAM could command an intrinsic value of $90m-120m. That would amount to $12-17 per share of CCAM if it could be unlocked. They still have no debt, could tap a revoling line of credit any time they wanted and are working hard to leave the OTC/BB. They either plan to go to the NasdaqNM, but that would require a valuation north of $5. As an alternative they are considering the AMEX where I think $3 is the minimum bid price before moving. One of their competitors (Del Labs, DLI) is listed there, too. Summing up, CCAM offers an enormous amount of value. All left is visibility and name recognition. I wouldn't be surprised if CCAM gets acquired rather sooner than later. Mr. Bermann finally stated they are not predisposed against being acquired but the price has to be north of intrinsic value ($12-17). seems to be one of the best value plays on the market CROSSY BTW: this interview changed my mind about the company. I now plan to hold it for the long haul, north of $5 and wait for it leaving the OTC/BB. Cheers !