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The Phantoms' Wake Up Call Email Hotlist" (tm)
June 9, 1997
For those of you that are a new subscriber, I want to point out that today's edition is that of WUCEH, rather than the WUCEH TRADER. The difference is, WUCEH is devoted to long term investing and spotlights stocks that are
worthy of consideration in a speculative portfolio. The WUCEH TRADER, on the other hand, is focused on day trading and special situation stocks that are highly volatile.
I hope you enjoy today's selection, as I feel it is truly a gem of a company that has tremendous potential, both in the short and long term. Although speculative, hopefully you will agree that this a rare find.
The company is;
American Bingo & Gaming Corp. (NASDAQ Small Cap: BNGO) $3.50
What makes American Bingo a rarity is that at $3.50 they represent the leader in the $4.4 billion dollar charitable bingo market. That $3.50 also buys you the confidence that 5 consecutive quarters of sequential record revenues and a balance sheet that has more than doubled in cash on hand, that now stands at $1.25 million. Not bad for a company that only has a little over 4.2 million shares outstanding, translating into almost $.30 per share in cash.
If that doesn't get your attention, then possibly the .24 EPS over the past four quarters, putting the P/E ratio at a very realistic 14.5.
Last quarter, which was announced on April 17th, produced revenues of $1.035 million and net income of $302k or $.07 per share. Both are placing BNGO on track for record growth for 1997, with revenues projected to be over $4 Million and earnings exceeding $.30 per share.
According to the company they feel confident that they will meet these numbers and site their expansion into S. Carolina as a prime factor. Besides the Charleston bingo and gaming center, BNGO is planning further expansion into South Carolina, with other gaming centers scheduled to open in the third quarter of 1997, bringing the total number of bingo centers open, or in development, to 20, nationwide. The company expects it have between 25 to 30 centers open by the end of 1997 and 100 centers by the year 2000.
This is a good time to point out that most of the above numbers are derived from the core business bingo, yet they are starting to develop and transition several properties in to sharing video gaming, which will add even more revenue and higher returns on existing properties. In South Carolina video gaming is allowed, but controlled by a minor detail, only 5 machines are allowed per room.
Now if those large rooms were to be divided into smaller rooms, well you get the picture.
American Bingo now operates in Texas (Austin headquartered), Alabama, and now South Carolina, with further expansion into other states. But here again, American Bingo has shown some good management decisions in not just busting onto the scene, but rather checking out the political atmosphere and being highly selective as to what markets they enter. Back in the fall of 1995, BNGO was going to enter into the state of Florida and open 3 centers, but quickly found that Florida was not conducive to profitable operations, at least not in the overly restrictive guidelines that the state imposed. That was a valuable lesson, early on, and they have been exceedingly cautious about entering new markets. Their ideal location is one that has both a resident population of older citizens and also enjoys a heavy influx of tourists.
The stock price has reacted nicely to the consecutive record earnings reports. Since last year the stock has traded to new 52 week highs above $3.00. The last 52 weeks has produced a weakness in the stock price from this time last year ($3) to a low that was established last fall in the $1.25 level. But since the beginning of 1997 BNGO has been on a solid ride up, backed by each quarterly report, climbing from $1.50 in January to the $2.25 level in April, when it announced .07 EPS and over $1 million record first quarter results. Since then it has climbed nicely to the present level at $3.50, and continues to look good going forward.
It is my contention that American Bingo deserves a close look and that you should do your self-a favor and call the company at 1.888.879.2646. Although the stock price has made a nice a percentage move recently, I plan to nibble here, take a position, and use further improving fundamentals to buoy my investment further. Also I would look for any retrace in price to the low $3.00 as another reason to add to my position.
I believe with patience, BNGO will realize a target of $8.00 by years end, and could hit the mid-teens in 1998, if they continue on this aggressive and profitable expansion program. The fact that they only have a little over 4 million shares outstanding and have made a statement that all future financing for the expansion will be generated from within, make this solid contender for a shot at my portfolio.
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