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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (2998)	1/10/1998 2:23:00 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78751

Ron: re: MAX. I think Mercury Air was rated as one of the fastest growing small companies by INC. or some other group. One of the things they do, it seems to me, is front money for fuel purchases to "iffy" airlines who in turn then buy their jet fuel from MAX. Apparently margins are good, and this can be a very profitable niche business. Of course, as occasionally happens, one of these "2nd tier" airlines goes bankrupt or defaults; this is apparently what has recently happened. MAX has taken the hit and is now increasing its reserve for losses. One concern might be... how many more of these defaults are waiting to happen? Lots of small airlines out there from every country and lots of concern (my opinion) about decreasing tourism, business travel. Financials for MAX don't look so great to me - that is, I don't see anything that appeals to me. I do like that sales seem to be increasing rapidly (which may be very easy when you loan customers money to buy your product)and psr is low (which I would expect from a fuel distributer-type company) Ron, you might want to look at CGO (Atlas) also in the niche airline market. They help majors by transporting cargo. PE estimates for '98 are about 10x. (I try not to use analyst consensus estimates - but okay here for just a general discussion.). PE of 10 is okay for this business. I wouldn't pay more. (And I don't own the stock. Just offering it up for a looksee.) Stock is down from much higher levels. Paul