Today’s 2014 Top Picks update is a low-priced stock that has seen its turnaround slow, but has lots of cash and no debt.
Agjunction (AJX.TO)
from Contra the Heard
Agjunction (AJX.TO) has run into some tough sledding. As CEO/President Rick Heiniger stated, “General weakness within the agriculture markets in the first quarter of 2014 has continued into the second quarter of 2014, resulting in lower year-over-year sales volumes.” Though it looks like crop yields will be good, at this point it appears that a turnaround for the company will be delayed. However, even with the difficulties, AJX expects to be profitable due to cost cutting.
The company’s financials remain excellent. Cash in the bank is over $13 million, as compared to about $2 million last year. The additional funds offer the enterprise more flexibility in the turnaround. There remains no debt and the book value virtually echoes the trading price.
The Initial Sell Target is $3.49, about quadruple the current trading price. The company traded above that level in 2008 and for a number of years before. While we believe that the target remains reasonable and the percentage increase is very much in line with some other Contra success stories, patience by investors in companies like this is a must.
Benj Gallander, Contra the Heard Investment Letter, www.contratheheard.com, 416-410-4431, July 4, 2014