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Microcap & Penny Stocks : Grand Havana Enterprises(PUFF) -- Ignore unavailable to you. Want to Upgrade?

To: Franco Visoria, Jr. who wrote (116)	12/1/1997 11:07:00 PM
From: William, III	Read Replies (1) \| Respond to of 160

BIG volume today with a vey narrow trading range. There's got to be a reason for this volume. Any ideas?

To: Franco Visoria, Jr. who wrote (116)	12/1/1997 11:15:00 PM
From: William, III	Respond to of 160

To all: Here's a news story from today on Caribean Cigar off Yahoo Caribbean Cigar Co. (Nasdaq:CIGR - news) Phone: 305-267-3911 Price (11/28/97): $1 7/8 HOW DID IT FIND TROUBLE? Ashes to ashes, snuff to snuffed out. Shareholder expectations for Caribbean Cigar have gone up in smoke this year. The premium cigar maker came public with a lofty price tag but investors bought in anyway. Cigars were hot and Caribbean had edged out the more reputable cigar companies to debut on the stock market. With dozens of Hollywood celebrities taking to cigars, it had become a fashion statement -- the politically correct version of dragging on a Marlboro. So Caribbean had a trendy debut last August at $11 a share and worked as high as $12 3/4 by this February. Then investors got burned. With the underwriters content to have given the stock support over its first six months, the company suddenly had to justify its fad-flavored valuation. Consolidated Cigar (NYSE:CIG - news) and General Cigar (NYSE:MPP - news) had gone public with years of history and healthy margins. Caribbean Cigar had neither -- just the initial good fortune of being an upstart in a very hot tobacco niche. BUSINESS DESCRIPTION Caribbean Cigar makes and distributes premium cigars and cigar-related products. With a manufacturing facility in the Dominican Republic (where most non-Cuban cigars are made) and half-dozen retail shops, the company is integrated in all three aspects of the cigar trade -- production, distribution, and sales. FINANCIAL FACTS Income Statement 12-month sales: $11.3 million 12-month income: ($2.4 million) 12-month EPS: ($0.47) Profit Margin: N/A Market Cap: $9.6 million Balance Sheet Cash: $0.4 million Current Assets: $9.1 million Current Liabilities: $4.2 million Long-term Debt: N/A Ratios Price-to-earnings: N/A Price-to-sales: 0.85 HOW COULD YOU HAVE SEEN IT COMING? Last week, Barron's cover story was on the eventual passing of the cigar smoking craze. It put a typically bearish spin on the market as a whole, noting how the market for cigars had peaks in 1929 and 1973, signaling the start of the two worst bear markets of the century. But when Caribbean, a company with paltry profits and a line of no-name cigars came public, investors didn't seem to mind paying six times sales for a company that was probably years away from establishing itself as a player and hitting the 17% profit margins that Consolidated Cigar was sporting. After all, it was the only pure cigar play available. Consolidated would not debut until the end of that month, and General did not hit the market until February. Both Consolidated Cigars and General Cigars fared well after their recent IPOs. Then again, it's all in the tobacco. While Caribbean was trying to penetrate a smoke-filled market where brand names had a following, Consolidated and General were selling Dutch Masters and Macanudos, respectively. WHERE TO FROM HERE? Even as shares of Caribbean fell, the company managed to produce fiscally. Three consecutive quarterly profits, even if only pennies, were a promising start and in contrast to a share price that was caught in a humidor. But the pessimism was validated when the company had to restate the June quarter financials to show a loss, rather than the third successful quarter it was originally billed as. The CFO and a fellow board member resigned over the matter. The backtracking also came at a time when the company was getting ready to move into a larger warehouse. The increased capacity would naturally be a positive, but not if the industry has gone overboard on supply. In Barron's, Consolidated noted that it completely sold out of the 350 million cigars it imported last year but will have a hard time moving the 500 million coming in this year. If the heavy hitters are going to have to discount the new batch of stogies, where does it leave the niche players who do not have the margin leeway to follow suit? So Caribbean has become ashtray fodder, now with questionable profitability in a sector with questionable growth. A share of Caribbean can buy one of the cigars today, and there is no reason to believe that both won't get even cheaper. -Rick Aristotle Munarriz