Acro's Ambition

J. Taylor's Gold, Energy & Tech Stocks (12/23/2009)
"I talked with Marty Spake, the CFO of Acro Energy Technologies Corp. on Friday, December 18, 2009. Marty gave me an overview of the company and its prospects going forward, and they are indeed very bright. . .

. . .the real breakthrough for this business has come from funding provided by a company named Sun Run. This is a private electric utility company. Sun Run funds the solar installation, and, in exchange, homeowners buy their electricity from Sun Run. The economics of Sun Run are enhanced by tax breaks given to partnership investors similar to those enjoyed in the oil and gas exploration business.

Based on what we can see at the moment, Acro appears to be a very undervalued stock. . .To the extent it can increase per-share earnings and cash flows through acquisition, the upside would appear to be even greater.

What is the upside for this company? Currently with the stock selling at C$0.26, and with 27.5 million shares outstanding, it has a market cap of approximately US$6.75 million. Its projected EBITDA of C$6.6 million, or about US$6.2 million, means the stock is currently selling at slightly over 1 times projected cash flow for 2011, from organic growth alone.

We think a modest multiple of 5 times could very easily be in order, which would take the stock upward to $1.25 per share. A much more aggressive multiple and per-share price could be assigned by the market, depending on how rapidly the company grows and depending on how much dilution.

We believe the management of this company is capable of executing its organic business plan and very possibly much more than that, given likely acquisitions. The bottom line is this. At least given the present scenario, homeowners have nothing to lose by signing up with Sun Run, because they reduce their electricity costs into the future without having to lay out any funding up front. In California, the average homeowner saves about 10%, or $15, on his monthly bill of about $150. When times are tough and a large number of folks in California are having a tough time making their mortgage payments, any additional cash flow will be greatly coveted. An aggressive marketing program should help Acro make its goals for 2010, and if that happens, we would expect this company's shares should rise significantly next year."

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