Monday, October 31, 2011

Organic Resource Management

I had read an article in 1997 about buying small cap stocks. It said you should buy a basket of them, of at least 5 stocks. If 2 of the 5 when successful you then would be a winner. I will talk about one of these stocks today, but tomorrow and the following days, I will talk generally about my adventures in small caps.

I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 21.16 per year or a 96.5% capital loss. This is, of course, a “green” investment.

This stock actually peaked in 1999. It initially fell some 87% in 2000, and ultimately fell over 99%. In 2008 this stock went through a 20 to 1 consolidation. This is never a good sign. However, in 2009 it turned a profit, the first one for a very long time. However, in 2011, this company again lost money.

One good thing to talk about on this stock is that it has been growing its revenue. Revenues over the past 10 years have grown at the rate of 33% per year. Revenue per share, over the past 10 years, has grown at 15% per year. I, unfortunately, cannot say the same thing about revenue growth over the past 5 years. Revenues made a peaked in 2008 that they have yet to match.

Shares prices, over the past 5 years are up some 5%. This is the last of any growth. There has been none for EPS, Cash Flow or Book Value. The company made no earnings for the financial year ending in June 2011. The most positive thing to say for cash flow is that it is usually a positive figure. The Operational Profit Margin (CF/Revenue) Ratio is rather low, with the latest ratio at just 5.2%. The 5 year median OPM is 6.5%.

Debt ratios are ok for this stock. The current Liquidity Ratio is at 1.06. The current Asset/Liability is much better at 1.80. The current Leverage and Debt/Equity Ratios are ok at 2.25 and 1.25

I cannot find any analysts that follow this stock. The most positive thing that I see is that more than 66% of the company is owned by insiders. I did not sell this because of the low value. It is also interesting to track such a company and see how it ends up. You do have a tendency to keep track of companies you invest in. I will retain the shares I have for now and see what happens.

There is an article on this company in a magazine called Biomass. There is no date on this article, but it is given a date of 27 Feb 2009 by Google.

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 Resource. 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