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Non-Tech : LIFEWAY FOODS (LWAY) -- Ignore unavailable to you. Want to Upgrade?

To: Ryan Plovie (Hijacked) who wrote (185)	2/7/1998 2:37:00 AM
From: mark cox	Read Replies (1) \| Respond to of 352

Hi Ryan, you are correct, as far as I can tell LWAY lacks only one criteria. That is 2 out of the last 3 years with $1 million in pretax earnings. As of 9/30/97 they had more than that for 1997. So that leaves one remaining hurdle, as soon as LWAY earns more than $1 million in pretax earnings for 1998 I believe they would qualify. They surpassed $6 million in Total Assets on the same date and they have more than 1300 stockholders. The only unknown to me is how many market makers there are. You said: that when they get off the Small Cap market, then they will appreciate. Do you mean that the stock price hasn't appreciated yet? <g> I would call a +100% gain plenty of appreciation for one year. I will stress again to think of LWAY as a long term investment. It will not be a moonshot in my opinion. What is most important to me is consistent high growth while keeping the balance sheet in good order. This will keep the company out of trouble and allow us to sleep at nights being invested in risky microcap stocks. I had a big loser before with a company that was growing like gang busters for 9 straight months with earnings growth in the triple digits, the stock rose from $3.00 to $9.00 and then suddenly revenues and earnings went flat, debt rose, cash was disappearing, accounts receivables rose, the stock dropped to a low of $1.50 and is now at $2 5/16. It was Lukens Medical. So high growth is great as long as you can sustain it and afford it. You will notice that I post some information about the fundamentals of LWAY which I compute directly from the financial reports. Take a look at posts 133, 136, and 174. LWAY can afford high growth and you can bet that the CEO won't put the company at risk by trying to grow faster than he thinks he should. He told me that he has found a perfect balance. The past 11 years proves him right. I will be going over the 10K when it comes out. I always look for the first signs of trouble. I don't expect to find any. What LWAY has done this past year with bringing the new facility online and paying off 40% of it and all of the 1st phase new equipment, plus paying for a 45% increase in Inventory and launching at least 2 new products and all the while still showing some respectable growth, maintaining high margins and still having $1.4 million in working capital is amazing. It is probably these types of accomplishment that has prompted AAII to put LWAY on their Shadow Stock List. The Motley Fool wrote a positive article about them just a little while ago on their Daily Double. It seems LWAY is beginning to be discovered. As Peter Lynch says, you should get in before Wall Street discovers them. I did and apparently you did too. Mark