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Wednesday, April 22, 2009

Why DIT could be and should be a $100+ stock

(It is extremely thin and not for large positions or chasing in my opinion!!!)
DIT is the best kept undervalued stock secret just needing to be discovered. The fundamentals of this company are amazing. I don't think anyone knows about it. By my calculations if you apply the P/E of DIT's competitors, this should be a $100+ stock. In at $32.

1) DIT Basic Shares O/S Approximately 507k Float Approximately 307k See Bloomberg

2) According to this site, DIT is the lowest float stock on all the major exchanges See Low Float Stocks (It is extremely thin and not for large positions or chasing in my opinion!!!)

3) DIT's IBD ratings have vastly improved after this last quarter where they would qualify for the IBD 100 list. Composite is 98, EPS is 98, RS is 96. DIT's EPS is rated higher than GMCR , which is in the same IBD category and was on the IBD 100 after a nice run.

4) DIT generated Cash from Operating activities of $18m and paid off debt of over $15m for the first six months of this year Read Cash Flow Statement in Press Release

5) DIT pays a dividend Read Press Release

6) DIT just reported $2.60 EPS in what is traditionally its weakest quarter See Results

7) ***DIT redeemed the Series C Preferred stock which will reduce fully diluted shares by 146,842 in this present quarter.
“This transaction will reduce our fully diluted share base by 146,842 shares. The full impact of this will occur in our fiscal third quarter,” noted Andrew Plummer, AMCON’s Chief Financial Officer. Read Press release

8) ***For this recent second quarter (traditionally the weakest) DIT had Net Income of $2,096,358 on fully diluted shares of 805,236 for EPS of $2.60. Next quarter with the redemption of the Series C Preferred stock, fully diluted shares will be reduced by 146,842 to approximately 675,000 - 700,000. If DIT did just the same EPS in the third and fourth quarter as they just did in the second the calculation would be $2,096,358 divided by 700,000 = $3.00 per share EPS. This would put them on track for $10 EPS this year or a $12 EPS run rate. Assuming they have zero growth in their traditionally two strongest quarters over their traditionally weakest quarter.

9) ***DIT competitors CORE, NAFC, and SYY all have a P/E of at least 10 See Competitor Stats

10)***$10.00 - $12.00 EPS X 10 P/E = $100-$120

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin’s Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin’s Market & Cafe and Akins Natural Foods Market. Company Website

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