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Monday, July 2, 2012

GENC - Major Highway Bill Beneficiary / Undervalued

GENC is a Nasdaq Company with a float of 4.7mm and outstanding shares of 9.5mm. The Company has GENC has Cash and Short Term Investments of $9.53 per share and a book value of $10.79 per share See Stats. GENC closed at $7.55 on Friday.

This person wrote a great article on GENC history and why they have so much cash. Gencor ($GENC) – A Free Business With A Huge Portfolio Read Article

Also the CEO said, "Our strong balance sheet is reflective of sound financial management practices. We believe this will continue to serve us well in the future while we continue to evaluate opportunities for expansion through organic growth and strategic acquisitions."

I believe the reason why the stock has traded so cheap was due to the lack of a new long term highway bill by the government. From the last press release, "However, we continue to remain cautious about the growth of the U.S. economy and in particular the effect upon our industry that the absence of a long term Highway Bill, and adequacy of funding of the Highway Trust Fund may have. Current funding under the ninth SAFETEA-LU extension expires on June 30, 2012. It is uncertain whether a new multiyear bill will be enacted or another short term extension granted." Read Press Release

The great news for GENC is that the new Highway Bill was finally approved last week and now just needs the signature of the President. Read Article

This is huge news for GENC as they stated in their last 10-Q "the Company believes a new multiyear highway program would have the greatest positive impact on the road construction industry and allow its customers to plan and execute longer term projects." 10-Q
In 2008 the Company was firing on all cylinders and the stock hit over $30 per shares as they did $1.59 EPS that year. They did $0.29 EPS last Q with about $0.10 coming from Operations and the rest from investment income. I believe with the passage of the highway bill, GENC could trade in the $10-$15 range in the short term.


Anonymous said...

Come on you've waited a couple of years for this low float mania. It's bread and butter time. Get those picks out fast. ROTFLMAOOOOOOOO.

Nishi said...

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Nishi said...

thanks for updating me about GENC ,before reading this blog post i dont know anything about this topic.
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