This morning, Cormark Securities bought 302,000 shares.
I feel i have gone full circle with my posts on what i truly believe is one of the cheapest
stock on the TSX.
I have waited now a little more than a year and it could take a few more weeks or months
but i think with it's 24 rigs working, Akita is set up for huge price appreciation.
So what is a few more month to see what i have been anticipating.
This is a resume of part of previous posts.
Investors will be surprised when Akita reports it's Q3 but way more when they report their Q4
results.
This will be my last post for a while.I will post back when we Akita crosses the $2 mark.
Re my end of July post.
At the time of that post, Akita was running 7 rigs in CDN and 8 in the USA.
As of today, they are running 12 in both Canada and in the USA.
I have done small tweaks to reflect Q2 results and actual SP.
35 = 1.6
In Akita's presentation, they write that the value of their rigs replacement value stands at
$469 million CDN or $12.32/ shares.Reduce that amount by the net debt and we still get
$11.12/ share.
Yes $11.12 and the stock trades at $1.61
Replacement value is not the value of newly built rigs, it's the value to get equivalent
piece of equipment at the same state.
The value of a newly built triple pad is about $40 million each.
I put a low value to their single, double and i came up to a value of $20.50 / share for newly built
rigs
At Friday's close of $1.61, the market cap of Akita was $64 million.
Akita's 35 rigs(Mostly Triple) are valued at the equivalent of 1.6(not even 2) new rigs.
So the replacement value(not the value of new rigs) are valued at 14%(86 % discount).
So the market is valuating Akita’s 32 rigs, land, equipment... for less than the value of not even 2 new triple???
That’s not taking in account the deferred tax asset worth $1.69 / share.
A net deferred tax asset has not been recognized for $67 million (2022 – $76 million). This amount is primarily related to non-capital
losses carried forward.
Total gross tax losses available to the Company are $415,652,000 with $379,378,000 in the US and $36,274,000 in Canada. The first
of these losses will begin to expire in 2031.
One would understand such a crazy disconnect if Akita was going under, had unmanageable
debt load or if the value of their assets were mostly goodwill or intangible.
None of that is the case, in fact, debt is highly manageable and going down, Akita is profitable
and well managed.
I will say it again, Akita is one if not the most undervalued, unappreciated stock on the TSX.
Having such a small market cap. make them untouchable by most institutional investors.
One day, small investors will come to realize how cheap this company is trading at.
This time is approaching ...Once they reach their debt target, i am confident that Akita management
will deploy the excess cash flow to either buy back shares if they are still as depressed as they are or bring back their dividend policy.
This day is not that far away.
M.Monachello from ATB Capital estimate that Akita will have
Cash flow / share of $1.34 in 2025 and $1.47 in 2026
Free cash flow / share of 87 cents in 2025 and 99 cents in 2026
EPS of 45 cents in 2025 and 54 cents in 2026
Right now, Akita is running way more rigs than what he his using for is forecast
These numbers could be on the low side.
If i am right, Akita will nor double or triple but be a 4 to 5 bagger.
I was again looking at the float this morning.
There are 38,080,407 A shares outstanding.Assuming that Aegis,Sentgraf,Foyston,
Linda Southern,,C.Wilson,Arrow Capital,Colin Dease,Darcy Reynolds and myself are not sellers, we are left
with 23,519,182 shares.
At last night close of $1.61 this is just shy of 38 million$.
When small investors realize how cheap this company is trading at versus what it is worth
and when they start seeing much improved results,it won't take much buying power to move
a float cap of 38 million$