Stockchase Opinions

Steve Martin AgJunction Inc AJX-T TOP PICK Apr 18, 2008

Manufactures precision GPS equipment for the agricultural and Marine segments. 85% of their revenue comes of agriculture. Product saves farmers money and time. Also becomes more attractive as a farmer's land-base expands. Expect a great quarter reported in the next week so this is a short-term buying opportunity and a long-term hold.
$3.710

Stock price when the opinion was issued

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COMMENT

Did a merger with Novarient about a year ago. Usually when companies of equal size merge, there are often a lot of write offs, which has happened somewhat in this case. He likes the company and thinks it has a lot of potential. It wouldn’t surprise him if there was a lot of tax loss selling towards the end of the year. Before buying, he would probably wait towards the end of the year just in case there is more tax loss selling, but you could do well by buying now.

RISKY

The AG space was exciting a couple of years ago. It is a necessary space. Their merger left their sales back where they were pre-merger. It is taking some tax loss selling now. Management is reasonable. They have no debt.

TOP PICK

A GPS system for agriculture. A speculative play. Did a merger over a year ago, and unfortunately the revenues are now less than when they merged. In the recent quarter, they lost $14 million, but about 11 million of that was a good will write off. No debt and $15 million in the bank. Doesn’t expect a turnaround soon, because the agriculture market isn’t that good.

DON'T BUY

They have a far bit of cash. They have no debt. They continue to lose money. They can lose money in good times and in bad. Their sales now are less than before they merged.

WATCH

They did a merger with another company that doubled their size, but then the revenues went below their previous levels. A lot of the AG companies are doing well. He is happy to hold it, but does not know when there will be a breakthrough.

COMMENT

Precision agriculture. Still on his Buy list. It hasn’t worked out at all for him. Agriculture seems to be doing better, but this one has been left on the rails.

PAST TOP PICK

(A Top Pick Feb 7/17. Down 5%.) This does GPS's in agricultural. Has lost money most years. He made quite a bit of change before, buying it at $.50 and selling it for around $1.30. Last quarter revenues went up 35%. The balance sheet has no debt, and they have $16 million in the bank.

BUY

He sold it and bought back lower. He cannot find a good catalyst to make it move. Revenues went up 5 straight quarters, but this company cannot make money. He likes it now. It is on his buy list but he does not know what is the next catalyst. Maybe it is profitability.

BUY
They do steering systems for tractors. They moved their operations from Canada to Kansas and are consolidating operations to reduce costs. It doesn't trade much, a small company, so beware of putting in a market order. This could double in price. They sold off some of their operations, which may make them a one-trick pony (he hopes not). This sell-off may ease their over-buying.
RISKY
He owns this and is under water on it. He bought more at $0.60. He made a mistake around their 3 year contract expiration -- he should have sold then. Management is working hard, but it has a lot of difficulties ahead. He is not going to double down on it. Good financials, next to no debt and money in the bank. A speculative buy.