Any stock under $10 is there for a reason (well most of the time) but there is one that might be worth looking at however and its TIE. Titanium Metal Corp has been drilled from a 52-week low of $19.50 to $4.39. Sales are forecasted to drop 19% this year and frankly the sales could drop more. In addition, this firm is tied to cyclical areas, especially commercial aircraft. Some GDP estimates are around -2.5% for 2009 and GDP declines normally depress demand for durable goods. Another risk is margin contraction, due to lower selling prices and lighter shipping volumes.
However, there are some noteworthy bullets for this stock. One is that that the firm is projecting a profit this year. Analysts estimate a $0.62 EPS for 2009 and the firm is projected to have positive free cash flow in 2009. In addition the firm has no long term debt on the books, which is a big plus. When drilling down deeper in the books, the book value of the firm is $6.45 and has about $0.13 of cash on the books. So, the stock is about 85% of book value, with no debt.
But there is one reason why I think this thing will takeoff and that is takeover rumors. The takeover rumors on this name have been running wild! On February 26th the calls were on fire and the rumors have went away but are coming back. I think this could be taken out at $9-11 but has a nice $1.50-2 upside on valuation, if they can deliver.
This is a risky play but at the right price I will look at it as a speculation play because of the clean balance sheet and takeover rumors. As for the technicals, I’d like to see more strength and price performance, however, the chart is a little compelling. Looks like a possible V bottom but time will tell. I no position and would like it to come in a little bit more, preferably in the $4’s. Will keep you posted but TIE is the ticker, so good luck and get your learn on. Will be back tomorrow AM with a market outlook for the week, as well as my take on the market and the Kass/Shilling segment.
No comments:
Post a Comment