Monday, November 8, 2010

Organic Resources Management

The performance of this stock is less bad than it used to be. I bought this stock (TSXV-ORI) in 1997 as part of a basket of small cap stocks. It was barely recovering from the last recession, when it hit this one. I have not bothered to sell this stock because it is worth so little. The good thing I guess is that it has started to recover from the current recession. My average loss per year on this stock is running at about 20%. It is a good job I never invest much.

I guess the worse thing to happen to this stock is that there was a reverse split of 20 to 1. That is for every 20 shares you owned you got 1 new one. Reverse splits are always negative. They usually result in a stock getting even more hammered in the market. This, of course, happened to this stock. However, it has been recovering since then.

For this company, from 1998 to 2008, it made no profits. 1998 was a terrible year for the company, revenues declined about 70% and stock prices fell almost as much. Although total revenue has been increasing since 1998, the revenue per share has been dropping because of the increase in the number of shares between 1998 and 2007.

Between 1998 and 2007, shares increased on average at the rate of just over 23% per year. However, the biggest increases occurred in 2002 when the shares increased by 50% and in 2007 when they increased by about 120%. The big increase in 2007 was because a lot of preferred shares were changed into common shares. I guess the other thing to note about ownership is that Charles Buehler, the CEO, owns about 45% of this company. A director owns another 22%, so some 67% is owned by two insiders.

The first year of profit was in 2009, when the company had earnings of $.34 a share. However, in 2010 the earnings decreased over 50% to just $.15 a share. (Please note that the financial year for this company ends at June 30 each year, so they have reported for the financial year of 2010.) However, one good point is that the company has, in most years, have had a positive cash flow. The cash flow has been a bit erratic, but it has been positive.

Another positive note is that the Liquidity Ratio has been steadily increasing from below 1.00 to a current 1.68, a very good Liquidity Ratio. The Asset/Liability Ratio has mostly been quite good and at the moment at 2.56 is very good. Another good thing to point out on this stock is that the Graham Price is at $2.42 that is almost 40% above the current price of $1.50. Maybe another positive thing to say is that there has been some Insider Buying over the past year. This does not amount to much, just $40K, but it is something. There has been no Insider Selling over the past year.

My basket of small cap stocks did not do well and most we hammered in the last recession. I only have a couple of them left and this is one that I have left. It was an interesting experience though. When this stock initially fell, it seems senseless to sell, as it was not worth much. Currently, the value of my shares has gone up but I have decided to hold on to the shares to see how well they will do in the future. I have no intentions currently to buy more.

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 here Organic Resources. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

No comments:

Post a Comment