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Advanced Environmental Recycling Technologies, Inc. Message Board

  • tonew tonew Jul 27, 2010 8:47 PM Flag

    Time to Buy?

    I got into this company about 6 years ago, made a few dollars and wonder if now is the time to again try a few shares? Thanks for your honest thoughts. Have a good week.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Wondering that myself. Housing starts are up, according to a report today. I hit a major homer here a few years ago, but am out of touch now. Going to take a look. I replaced my front farmhouse porch with the stuff this summer -- tired of all the rot. It's a pretty good product, IMO.

    • I think it is, if you're willing to hold onto it for a while. Management is getting its game together, but they still have a lot of problems to work their way out of. Their financial health is still extremely poor. Moreover, expect to see significant stock dilution in the future. Lots of stock options and warrants out there, not to mention the equity offering mentioned in the shareholder letter. So, there are too many uncertainties to project future stock price. To me, the most attractive feature of this stock is as a hedge against rising oil prices. It's a cheap way to reduce portfolio volatility when oil starts going up again.

      FWIW, I was long for a few years, sold out, and got back in within the past month.

      Long

    • Revenue is Strong @ 84M, however debt is 40M.....
      $$M
      Revenue: 84
      Assets : 56
      Liab: (65)
      COGS: (64)
      Operating Expense + Tax & Other: (17)

      =(6.17M), 0r (.124_3_96) per Share, (3.14)PriceTo

      Not to long ago, Price was $3.42_134

      Recent news in the industry has not been great.....Inventory Turns are slow @ 48 Days.....

      You should look for debt reduction before you dive back in......

      Aggregate issues Approx:11M

      1 LYD = 0.3 BHD

      • 2 Replies to CJL72
      • Been following/owning AERT since the '90s. Started with trading, but then began accumulating.

        The new Watts, OK plastic plant, which started up this year is a definite game changer. Not only for an additional diversified revenue stream, but also for very cheap raw material for composite decking division, as well. Already supply, in last 3 months all plastic for decking division. Soon, in about 10, months they will double plastic reclamation capacity.

        Decking division is running at max capacity, and has been all this year.

        Yes, debt is high. However, lender relationship is very good and flexible. Some debt has already been re-structured to more favorable t&c.

        A wide variety of very beneficial changes have been made in last 2-3 years. Results of which should begin to show up in the next 12 months. Old business model has changed, significantly over a broad range of issues.

        Look for them to be re-listed in Oct+/- of this year.

        Stay tuned for improvement.

        IMO, share price is undervalued, but understandably so, due to past 36 months.

      • Recent High Share Price Reported per 1 Year Time Period:

        .70_28_3

        Have a good one!!!!!

    • 11. They have re-formulated their decking to reduce the risk of mold, as have most of their competitors, as well, thereby significantly reducing the risk of future class actions by deck owners who have experience mold issues.

      9. ALL extruders, in all plants are currently running 24 hours per day. Seven days per week, and they are in the early stages of adding two more re-worked extruders, that were recovered from the one of the closed plants. With seven extrusion lines running, they will have the highest level of reliability and MX contingency they have ever had. Also, as a result increasing extrusion lines, they are now in a position to easily re-allocate extruders-to-products production scheduling in order to match sort-term fluctuations in marketing and customer seasonal demand.

      10. Watts! This new state of the art plastic recycling plant came on line, earlier this year and has met all test levels so far, and is producing enough low cost plastic to supply the decking/fencing division, and produce a small surplus that is being sold into the plastics market, along with recycled paper, as well. This Watts plastic presents a very low cost raw material to their composites extrusion division, this adding to widening profit margins. As oil price rise and fluctuate in the future, AERT will much better positioned to ride out plastic market issues than most if not all of their competitors.

      11. They have estimated that their plastics division will eventually be a larger revenue stream than the composites division.

      12. They are currently able to retail their products at significantly lower cost than competitors, in spite of AERT having a much better product line, and more extensive warranties across the board.

      13. Because AERT has diversified its corporate mission from simple manufacturing to now include 'green' recycling, they are now eligible to receive 10 times as much low cost and interest-free financing from Federal, State, and local governmental agencies. They have just received financing to double the capacity of Watts, WITHIN THE NEXT 12 MONTHS. There is little doubt there will be more to come along that source of inexpensive financial aid, as well.

      14. They have become profitable again. Albeit only $0.01 for 2010 Q1 and $0.02 for 2010 Q2, this change is further confirmation that they are beginning to get back on track and have been implementing exactly the right objectives to position themselves for recovery, in spite of a very difficult period for the last 3 years. They seem to be doing the right things, across the board. If, as I think they will be able to do in the next few quarters, they may be able to show a net of $0.10 per share. This will certainly command an 8-10 PE. Do the math.

      15. Currently, share price is very cheap. Disciplined, well-place buy orders should easily net purchase of shares below $0.40.

      Caveats: Of course, AERT is still a speculative investment, and not without risk, and must be considered in light of the requirement that the general economy and housing must continue to recover. Reality dictates that these recoveries are not yet a ‘done deal’ will probably not be as swift as we wish.

      Currently, I’m buying and adding to my AERT holdings.

      • 1 Reply to surfboredsam
      • my previous note of $0.02 was based on and earlier unaudited PR.

        Actual net profit for 2010Q2 was $0.03 per share!

        IMO, this is the best news we have seen in 2-3 years.

        Caveat: this may be due to Lowes and independent distributors/dealers re-stocking after inventory "adjustments" for last 2 years, and/or initial stocking for new players.

        If not, annualized earning could might be projected at $0.12 on the following 12 months. If so, on a PE of 10-12 we could see share price move above $1.00 with another solid and confirming quarter, but they would need a bit of luck with the economy and housing markets, which I fear may not yet be in the cards.

    • tonew,

      Am sure that you probably already know some, or much, of this, but just in case, and for those who are less familiar with the company, I’m listing the following:

      In spite of the very slowly recovering economy and still sluggish housing markets, and the fact that AERT has plenty of debt, some old and some new from the effects of the recession, there seems to be several solid and a few compelling reasons to re-consider AERT for investment or longer term trades, going forward.

      Key points:
      1. In the past 3 years they have closed two of their most costly plants and moved the production to a couple of newer, more 'state of the art' plants with much lower labor costs.

      2. In the past 2 years they have substantially reduced unnecessary headcount at all plants.

      3. They have re-engineered their processes for more technical reliability, productivity, and flexibility of product quality control.

      4. They have re-aligned their product mix, eliminated old lines, and introduced new products, which are more closely attuned to current consumer tastes, and needs.

      5.The have implemented state of the art, computer-based accounts deliverable and receivables, marketing models, distribution models, and financial controls.

      7. They have, in addition to the Lowes 'big box' ChoiceDek product line, rolled out their MoistureSheild line, nationally, to a wide market of independent distributors/dealer.

      8. They recently inked a sweet National and comprehensive deal for both major product lines with Blueline, thus finally eliminating the old burdensome and higher cost distribution model with Weyerhaeuser. They will soon recover all rights to all trade names from Weyerhaeuser, as well.

      9. In the last 2-3 years they have strengthened senior management models with the addition of a new president and COO, and a new VP of sales/marketing, plus a few lower level managers, thus eliminating the former significant management bottleneck created by having, now only CEO, Joe Brooks solely running too many functions of the company. A big plus!

      10. A significant, but not all, portion of debt has been re-structured for lower interests and better ancillary terms. They have an extremely positive and flexible relationship with their debt holders.

 
AERT
0.113+0.001(+0.80%)Aug 26 12:20 PMEDT

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