Asquared

3 Value Stock Ideas

ARII looks interesting. I'm no expert in this field either. It appears that the vast majority of the cash sitting on the balance sheet came from a bond offering the company did back in 2007. Perhaps that is a sign that this management saw a decline coming and go the cash while they could. The debt comes due in 2014 and is rated B3/BB- (junk category, but close to investment grade). The bond has traded as high as 104 near the origination date and got as low as 70 during this recession. It's now around 90 or 10% yield.

One analyst report I read said the last quarter saw 0 orders! In other words, their entire production came from backlog. They only have 2 quarters of backlog left. So, it is a race to see how fast the economy turns around and thus orders rise and how fast they'll eventually grind through cash if the turnaround doesn't happen soon. Presently, it doesn't appear to be burning through cash as the backlog orders were right around cash flow neutral.

Will look forward to reading what else you find on this one.