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Aerosonic Corporation Common St Message Board

  • gmmcdon42 gmmcdon42 Jan 10, 2012 11:09 PM Flag

    Lets review....................................

    On May 5th/11 I posted a prediction that this stock would trade between $2.50/$3.50 over the next 6 months. 8 months have past and that is almost exactly what has happened.

    Up until the summer of 2010 this stock trade at about $4.00. Since then there have been a few precipitious drops followed by lower highs as it trended down to something less than $3.00 today.

    The company's execution on cost reduction and increased sales have been painfully slow. Sales are hurt by the fact that they are stuck in an industry that has spiraled down in this bad economy. It is harder to understand why they are so slow in reducing their expenses.

    I would not consider buying more of this stock until it drops below $2.40.

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    • Uuuggghhhh

      ok, thanks for the info

      that is frustrating for existing small fry holders like myself bcause it seems that if they indeed wish to eventually unload all of their shares it is going to take a looooong time bcause AIM just cannot seem to catch a sustained bid.

      Weeks go by with hardly any action and there are many days with zero volume at all.
      The stock is lucky to see more than 5,000 shares trade in a single day, doesnt happen very often.
      Even if at some point daily volume could get up to 10k shares, they would still need a couple months worth of being the seller of every single share traded before we would see a let up in selling.

      Its unfortunate, oh well, just will have to put this one on the back burner for a while and wait a few years

      good luck

    • sjmjsm Mar 4, 2012 12:18 PM Flag

      Since they are a 10% owner, they have to report each and every sale. I believe they have between 435,000 and 440,000 shares. Bleeding the shares out in the market could take them years to sell and will hurt other shareholders in the process by capping the share price. But I am not sure how many shares they want to sell. Only positive is that it allows new buyers or those adding to get a good deal.

    • Yes, that is an excellent assessment

      I agree

      just wish I had maybe 20 million or so floating around, I would snap up this company like a cream filled dunkin donut! :P

      I think fair price right now is $3.25, target is of course $4, and there seems to be support at $2.75, just my opinions

      is there any way to find out how many shares Elec Tech still has up to this point? I guess once another shareholder disclosure comes out it will show >5% ownership ?


    • Ahhh very interesting!

      Thanks all for the insights. I did not realize that Elec Technic had so many shares and they have been liquidating, no wonder there has been so much downward pressure on the stock price for over a year. It looks like in the past few months there have been some occasional erratic buying but even though the lows are higher and the highs are higher you always see the stock dipping back down erratically whenever there is upward buying pressure. This explains it. I looked a little more into their investment organization and it looks like their operations have taken a beating since the Euro debt woe downturn last summer so I bet you they have always liked owning AIM but they have been forced to liquidate all of their large holdings in order to raise cash to help them stay afloat and mitigate losses from all their other investments which are probably losing them a fortune. Hopefully their selling pressure will subside soon and the MMs can let AIM stock move up to $4, where it was stable for a long long time. I guess we'll see but it is at least some good news to hear that their largest shareholder did not even sell any when it had run to $7, that means they believe in Aerosonic its just that I bet at the time they were doing rather well in all their other investments and were just letting everything ride for gains. I think the Euro downturn has bankrupted many funds and hedge funds out there.

      I think by summer AIM could be trading at $4 and then maybe with really good earnings by next fall we could see $5's?!

      good luck !

      peace out

    • I agree with your points.

      Nice prediction and nicely stated.

      I personally think fair price on valuation for AIM is about $3 per share.

      Though the P/E value is way way low and the pps is pretty close to book value, the market does not seem to pay up for earnings of this company I think mostly because there is no competition for shares because no one really knows about this small cap company or stock.
      I think it has decent prospects for 2012. I really liked the glass display company acquisition. I think the future of cockpits and instrumentation is in digital displays so this company has a lot going for them as far as potential for growth. The main ongoing issue for them seems to be, like you said, the slowness of management in getting aggressive and landing new contracts. The contracts have dripped in here and there over time but I think they need to light a fire (no punn intended) under the sales team butt and get them out there and get some contract negotiations going with major manufacturers and ramp up production by implementing more automation at their plant. While I like the attention to quality and detail (hand made expert parts manufacturing) it is possible to go too far in this direction. They need to pump out the units for larger orders. The aerospace industry is not exactly on fire, but it is not contracting either, they have ample opportunities out there, they just need to get out of their hole and go land some large contracts and the profits would begin rolling in big time.

      I think EPS will once again move back into tens of cents and when it does the P/E will grow back to what it was and the stock will therefore trade back in the $4 to $5 range but until then it is stuck in book valuation mode and no one is willing to pay up on forward looking earnings even if they look to be eeking out some growth. I think owning shares in this one forces the investor to be in it for the long term, several years which means getting in even at the near term high of $3.50 is probably still a decent investment, even a year or two later selling at $4.50 would yield 23%.

      I think owning it for growth though is not necessarily the main reason to own it right now. I think it is a likely takeover target, for a couple tens of millions this whole company could get bought out by Boeing or some other large outfit. Aerosonic has many great proprietary devices which outperform (quality, precision, etc) over many of the other low quality faulty instruments on the market. I think it is a good pick on valuation but an even better pick for those who seek owning a possible takeover target. I think on a buy out it go to either $5 or $6 which would be a nice fair premium, and of course offer a great risk/reward for the ROI.

      • 1 Reply to up_yours_beotch
      • Good points and pseudo-synopsis.

        Would concur $5.00-$6.00 for a buyout, where the company is positioned today, seems fair.
        Longer-term, IMHO, think it could be double that.
        Despite their 'old fashioned', archaic manufacturing process their margins, particularly their historic ones are excellent.
        The business jet market, for them, seems to be non-existent now for 5/6 years. It should return. With the new product you have identified, the opportunity for growth and subsequent, considerable earnings leverage seems evident.
        You may be underestimating the earnings leverage here, IMHO. (Less than 4 million shares outstanding.)
        The orders they secured late last fall were significant and in recent times enormous.
        Agree with you marketing could be way more aggressive.
        They have lots of work to do yet, but looks promising indeed.