Tuesday, February 23, 2010

Organic Resource Management

I am today reviewing of Organic Resource Management (CVE-ORI) as I have not reviewed this stock since October 2008. This is a small cap stock I bought after I had read an article about buying small cap stocks. The theory in the article being that you should buy a basket of small caps of at least 5 stocks. If you had 2 winners and 3 losers, you could do well. Stocks can only lose the money you pay for them, but their gains can be, theoretically, unlimited. I do not have much left from the stocks I bought.

I still have this one because it is worth only amount $30.00 and I have less than a board lot of these shares. The reason I have below 100 shares is because they did a 20 to 1 reverse split. This sounded like a good industry to be in when I bought this stock in 1997, but I have lost some 22% per year on this stock. Good job I did not invest much. This stock made money in 1997 and only in two years since then. They made money in 1999 and 2009. It looks like they will make money this year also. Last year’s earnings of $.37 were only that good because of the sale of assets, so this year’s earnings should be lower, but still positive.

First, I should state that the financial year for this company ends June 30th each year. To talk about growth figures on this stock would not go any where. However, between 2008 and 2009, there was growth in Revenues, Earnings, Cash Flow and Book Value. This is positive. There is also expected to be growth in all these items except earnings between 2009 and 2010. See the above paragraph for remarks on earnings.

One positive item on this stock is that there has been steady insider buying of this stock over the past year. There are also other things. For instance, the Liquidity Ratio and the Asset/Liability Ratio are both above 1.50. The Liquidity Ratio is now 1.79 and the Asset/Liability Ratio is 2.76. This means that there is no problem with the assets covering their liabilities. Also, I get a Graham Price of $2.44, which is almost 50% above the current price and the Accrual Ratio is a great -13%.

Would I recommend anyone purchasing this stock? If you are small caps, you might be interested. I have moved on from small caps and probably will not be purchasing any more. However, perhaps some day, what I have in this stock might be worthwhile to sell.

The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is www.ormi.com/ormi/. See my spreadsheet at www.spbrunner.com/stocks/ori.htm .

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter at http://twitter.com/spbrunner.

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