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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: JoeinIowa who wrote (8186)	8/30/1998 11:01:00 AM
From: Amigo Mike	Read Replies (2) \| Respond to of 29382

Hi Jose, Discouraged about APCO ????? I don't know how long you have been following APCO ... but they have always maintained they would not buy back shares in the market. There are only 11 + million outstanding right now. A buyback might help ... but overall .... I would rather institutional investors buy those shares to drive the price. As far as lower margins on the new deals ???? APCO landed these deals to gain market share at a little lower margin. However, the deals are on top of the existing core business that is growing very nicely. IMO .... 25% margin with no deal is zero. 15% margin on potentially millions in sales is $$$$$$$$. It is important to keep in mind also that APCO's expenses will change very little. They don't have the need to hire hundreds more employees or expand office space, etc., during this high growth. Hence more cash to the bottom line and the lower margins don't squeeze profits. Notice that APCO has beaten the estimates by .02 or .03 every qtr for at least a year. I expect this to continue and might even hit .04 or .05 above estimates as Allstate and Banc One kick in. Estimates for FY98 are .49 for the year. IMO .... APCO will reach .54 minimum. FY99 estimates are for .61. IMO .... too low .... probably closer to .70. So the FY 98 PE now is 14 and the forward FY99 PE is only 10. Since the stock has fallen to these levels ...... I will likely load the boat with the common and ride the recovery. I will be watching close. In any event, APCO is trying to say "we landed some BIG deals but had to offer a little better pricing for the expected volume of business." My opinion, not APCO's. Amigo Mike