Monday, July 2, 2007

Important HIHO and CAGC News

Good Monday

I got smacked around by the market on Friday.

Both HIHO and CAGC both had news come out on friday. And both were bad news.

HIHO earned .16 for the year. And really about .10 if you take out the currency exchange. Even if they grow by 30% based on the actual profits (NOT currency exchange as that will swing big from year to year) They would only make around .13 next year based on that. I think they could do better than that but the currency exchange thing helped a lot this year. (It hurt a lot last year)

Even at .20 EPS for the year its still almost a $4 stock. (I am SHOCKED the stock didn't get hammered on friday) At .20 EPS its a 20x PE for a $4 stock. Yes they pay a dividend and I would like to get the dividend but not willing to pay $4 for the stock. If it was in the low $3 that would be a different story I guess. But I wouldn't touch it at this point.

CAGC came out with news of a private placement. Issued 5.5 million more shares giving them $15 million of capital to expand etc.. The problem is that basically takes their shares outstanding from 19 million to 25 million. And if they earn $8.5 million for the year instead of earning .45 EPS they will only earn .34 EPS. So they are knocking down .11 EPS off the stock. Or on a 10x PE they are knocking off $1.10 potential off the stock.

So at a 10x PE it would have been a $4.50 stock. Now at a 10x PE its a $3.40 stock. Which is just below where we are at right now. Yes it is great for the longer term. Though I had hoped to see some be gains in it due to it being at a discounted price.

My entry price is $3.21 on CAGC. I may bail on the stock this morning if I get a good price on it.

I'll keep you posted on the blog.

Again this has nothing to do with the project and I still ONLY own DFNS for that project.

Have a good day.
Steve Hoven

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