Gotta be part of this ..."The Anthrax Bubble"
Stocks Run 60% - 500% Overnight, Who's The Leader?
Recent anthrax scares across the United States have created one of the first speculative 'bubbles' in the market since the dot-com market burst at its ever-bulging seams. Fears for personal safety are justified in the wake of the new, indiscriminate, brand of terrorism sweeping the U.S. Postal Service. Growth Report would strongly urge caution with some of the high-flying entrepreneurial companies that offer far less protection to your stock portfolio. During Growth Report's attempts to quantify the recent activity in stocks such as eSAFETYWORLD, Cepheid, Vital Living, and InVision Technologies, we have uncovered an 'old economy' stock which is a far sounder proposition for anyone wanting exposure to this area of interest - without the risks associated with the 'bubbling' over the counter market.
North America's Largest Air Filtration & Ventilation Company
CECO Environmental Corp. [CECE]
$3.25 Close October 19th 2001
7.4million shares outstanding
$24million market capitalization
CECO Environmental Corp. ("CECO") has been in the air filtration business for 17 years and business has been good! The company has been no overnight success (as few are). Following sales of $200,000 in its first year, CECO has grown to a record $90 million in sales last year. Remarkably, this growth has come without the issuance of any shares of consequence over the period. Growth has been attained through leveraging this cash generative business with cash acquisitions. CECO is now the largest pure-air company in North America. The industry is highly fragmented - a situation that has allowed for the acquisition-led growth that has propelled the company to its role as leader in its field.
CECO comprises five subsidiaries, which have allowed the company to become a fully integrated problem solver, offering turn-key solutions to filtration problems facing everything from the oil and chemical industries to military facilities handling the safe disposal of chemical and biological weapons stockpiles.
On August 23, CECO announced second quarter results. For the three-month period, the company attained revenues of $23.1 million, and a net loss of $117,000 or $0.01 per share. Revenues for the first half of 2001 were $42.8 million. In the two months following the earnings announcement, the company has seen a flurry of orders for their air-filtration products. The company's 9-month bookings of new orders reached $74.8 million on October 10!
Get In On The Bubble...
Numerous other companies have seen massive increases in their share price and market capitalization as a result of the recent terrorist scares and corporate announcements designed to capitalize on the fear of future attacks. eSAFETYWORLD [SFTY], whose name even resembles that of a dot com, raced 700%, from the $0.50 range to over $3.00 on speculation following the company's October 22 announcement of mail opening system designed to limit exposure to anthrax spores or other contaminants into the air after opening an envelope or package. However, the company has never developed a product in the past and simply uses their web site at www.esafetyworld.com to "operate a business to business e-commerce site" - sounds like a dot com to us. For a company with revenues of $860,000 for the 9 months ending March 31, a market cap of $9.5 million seems a little unjust. Invision Technologies [INVN] has also seen a solid run from the mid-$4 range to a high of $14.75. The company which develops, manufactures, markets and supports explosive detection systems based on advanced Computed Tomography (CT) technology for civil aviation security has attracted much excitement in light of the September 11 terrorist attacks.
Vital Living Products [VLPI] is also gaining from the Anthrax scares. Shares have moved from the pennies to over $2 per share - a nice gain for a company without any reliable testing of their home anthrax test product. Another firm to benefit from the recent hype is Cepheid [CPHD], whose shares have run from the mid-$1 range to over $8.00. Even the company's CTO decided to cash in, filing with the SEC to sell over 800,000 shares for some $8.3 million - not a bad payday. With others capitalizing on the current bubble in our downward-spinning economy, why shouldn't you?
Why CECO...
Good question. One could argue that the bubble is over and unless you hopped on board with companies such as SFTY, INVN, CPHD, or others, you have missed the boat and might as well wait for the next bubble in the economy.
The Growth Report disagrees. We see opportunities in this market and view the current bubble in the stock market as an opportunity for individuals to realize significant gains in an economy on the brink of a recession. We see CECO as an excellent opportunity for investors to capitalize on the current situation in the market. The company's products have applicable use in potentially hazardous areas as a result of anthrax or other air contaminants. Growth Report sees CECO as an established company with a long-history in the air-treatment business, and we believe there will be a move by the company to help prevent damage from future anthrax or other air contaminant attacks.
While shares of CECO have risen in the recent weeks as a result of speculation that the company might begin focusing some of their products to combat biological attacks, the company has yet to make any formal announcement of such. With shares up roughly forty-percent (40%) as a result of this speculation, Growth Report believes there is significant upside potential from the $3 range should the company make such an announcement. Growth Report would like to issue a Speculative Buy on CECO, with a short-term target of $5.00 per share.
Happy Investing,
Doug Ramshaw, Editor-In-Chief
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