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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: Patentlawmeister who wrote (3769)	8/18/2003 4:47:51 PM
From: Crossy	Read Replies (1) \| Respond to of 37387

re: OTC/BB - CBEV (Capital Beverage) $0.31 HIGHLY SPECULATIVE but IMHO worth a look Becuase of the Highly Speculative nature of this company (sustainability of investment not assured) I am not going to include this firm in the thread portfolio which carries a qualifier ("absurdely undervalued") with a VALUE connotation, which is hard to justify. OTOH I would like to put forward ideas to research on. My stance is that I will include OTC/BB companies into the portfolio only if they are either NTA (Net Tangible Asset) positive or if they received client finacning (deferred revenue) like Corvu which is just pre-empted sales. As soon as this company will meet this test, it will be included in the thread portfolio.. Now Capital Beverage certainly has appeal. The company is not an "unfunded venture" but a Distributor of Beverages in the NorthEast Region. It's sales volume is in the $20-25m region per year and it has franchises of accepted national brands such as Pabst Brewing. Moreover they did acquire some breweries years ago to further balance out their operations. Sales have been growing 4-10% a year and the company has now been profitable for 4 consecutive quarters and of course is also cashflow positive (after some restructuring by trimming employment levels and wages - including management) Valuation wise this is more than a low priced stock : biz.yahoo.com - Price/sales of 0.04 and PE of 6 (5 cents TTM in EPS). The company has hiked advertising recently, a move that could pay off later. Just under 4m shares outstanding, marketcap is ultra-low $1.20m (microcap level) and Debt/Equity is at 7. However the comapny has recently started to nicely generate cashflow, almost $500k per quarter enabling them to become net debt free within one year. Gross margins are pretty improved over year ago quarters - north of 25% not bad for a company primarily into beverage distribution. The firm is also planning to expand sales coverage into adjacent areas. To me it looks like they are a real comeback candidate. Solidity still lacking but IMHO they have a 70% success probability to become really profitable, refinance on favourable terms and grow to levels north of $30m in sales annually over the next 2 years.. trading volume has been on the rise recently. Historically they were on the Nasdaq, trading as high as $8 - albeit that's years ago. Their gross margin and sales trends point to a positive scenario.. let's see - a real gambit but an interesting situation.. CROSSY