My claim about the economic value that the stock represents even after these gains is based on the following assumptions. Earlier this week, TAT filed a draft prospectus for the flotation on Nasdaq of its U.S. subsidiary LIMCO Airepair Inc, which will managed by the underwriters Oppenheimer & Co and Stifel Nicolaus, both of which are more than capable of leading an offering like this. TAT wishes to raise $45 million for the Oklahoma-based LIMCO (which wholly owns Piedmont Aviation Component Services) at a value of $100 million before money. Should the flotation be successful, (which, as experience has shown, is not always the case), then TAT, which is now worth a total of $122 million, will have potentially phenomenal value.
The online news site Bellwether Report is fast establishing itself globally as a site that many use as source for investment information. At the end of March, it published an extremely complementary review on TAT. "TAT Technologies helps militaries keep their cool; in the Middle East that's no small thing," wrote the site's aviation industry analyst. He was, of course, speaking in a jocular vein, but he really liked what he saw in TAT and rated it "Buy" due to the stock's fall to $20 from $26 on the eve of the publication of the company's report for the fourth quarter of 2006 and the year as a whole which, incidentally, were excellent.
Assuming that the flotation does go ahead (since it's not dreams we're talking about here, but a very healthy reality), even at a lower value of $80 million, TAT's current price is most definitely economic. I believe that TAT is operating in a rapidly growing field, and when I say this I refer to its heat and cooling systems as well as its aviation component supply and upgrading business. The company has a competent and experienced management, it is under the constant supervision of First Israel Mezzanine Investors Fund, and it is operating in a growing field. So what more could you ask for? It has even paid out a handsome dividend.
TATTF 1-yr chart
Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.