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Microcap & Penny Stocks : ARET (Formerly KLHE) -- Ignore unavailable to you. Want to Upgrade?

To: melinda abplanalp who wrote (2962)	12/20/1997 10:37:00 AM
From: (Bob) Zumbrunnen	Read Replies (2) \| Respond to of 4594

I don't have any kind of a feel for what the earnings will be when they come out, but am sure they'll be negative. At this point, the numbers aren't as important as the fact they'll be current with financials again. I don't expect to see positive numbers until the 2nd or 3rd qtr of 98. Really depends on how much work they drum up over the coming months. Once the stock starts showing positive earnings, I would expect its PE ratio to get into the 20-30 range and slowly back off to 15 as it gets larger and larger. I like to use conservative figures, though, so I base my outlook on a PE of 15. Using that PE, each million dollars of contract should be worth 1 cent of share price once financials are current and BusinessWire is being used. And actually, I'm erring way on the conservative side. For example, the $4M gig we have now gives us a 4 cent share price based on my calculations, but I'm only using one quarter's earnings for the calculation. Annual earnings are typically used, so if it is expected that at least one $4M contract will be landed each quarter (easily done, I think), the share price should be 16 cents. Personally, I do have expectations of share price in excess of $1.00 by this time next year if things go as well as I think they will. $100 million worth of contracts between now and then should do it at a 15 PE. I don't think Barry agrees with me on this price, but with all due respect, I've a lot of experience with forests; he really knows more about just this one tree. Plus, he and Delmar are two of the most cautious and conservative people I've encountered. From a stock person's perspective, I maintain that a $1 share price on $100 million worth of contracts (and expectations of continued growth) is the correct estimate. The company has already achieved two milestones: emergence from Chapter 11 and winning that all-important first contract since (the $4M hydroponics plant). Coming milestones and the effect I expect them to have on stock price: Financials in mid-January and subsequent usage of BusinessWire. Neither has a direct impact on the money coming into the company, but will send powerful signals to the shareholders and prospective shareholders. I think the combination will be good for a sustainable 5 cents per share. Winning any further contracts. There are plenty in the works, plus ones they're currently working on that we know nothing about. After BW usage, I fully expect each million in contracts to be worth at least 1 cent increase in share price. What I consider more important than the actual value of contracts they win now is that each one will increase the likelihood of further contracts. Companies are hesitant to be the first to award contracts to this company fresh out of Chapter 11. The more companies actually do it, the more likely more will. 10K due at the end of March. I expect this one to show red ink, but what will be important about it is sending a signal that we intend to continue to be in current reporting status. 10Q's due in May and August. I expect that the August one (2nd qtr, 98) and possibly the May one (1st qtr) will show profit. The price will go up dramatically when this happens. I do see some people (not you, melinda) get awfully excited about today's and next week's prices. Personally, my assumptions about this company are about the long-term prospects (a year or more) and those are the assumptions I'm betting on. Whether it goes to 5 cents next week or 1 cent has zero bearing on my assumptions or my position. Traders will benefit from the pennies I expect the price to go up in January, but that milestone is just one more step in where I think the company is going. If anyone has money in this that they can't afford to leave tied up for several months to a year or longer, I'd suggest they sell into the buying that will happen in January. And there will be plenty of it. Personally, my plan is to double my current position by the time the financials come out (on BusinessWire, I think). It will be possible for impatient people to make good money here over the next year or so, but I think those of us who are truly thinking long-term are going to end up rich for having done so. On KLHE's historical stock price, I'm coming up empty. I thought at one time I'd found it trading over $2 and am thinking someone told me $6, but don't hold me to either one. I'm still researching it.