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Appliance Recycling Centers of America (ARCI)

Today’s Top Pick update comes from John Gay, editor of The Quiet Investor, who is sticking by his recommendation until the market realizes its potential. He also has a brief update on his Top Pick for 2011, recommended 18 months ago.

“After a rise following our recommendation, Appliance Recycling Centers of America (ARCI) fell...

Today’s Top Pick update comes from John Gay, editor of The Quiet Investor, who is sticking by his recommendation until the market realizes its potential. He also has a brief update on his Top Pick for 2011, recommended 18 months ago.

“After a rise following our recommendation, Appliance Recycling Centers of America (ARCI) fell back to the price area at which we recommended it.

“Part of the reason was a very cautious recap of the 2011 successes, implying that 2012 would not be so fruitful. This was despite the fact that many of the elements of the 2011 year were still in place. They earned $0.77 per share in 2011 and though they might not match it in 2012, they still have good prospects for growth, especially in the recycling segment, where the major profits are expected to burgeon in coming years.

“Appliance manufacturers have a problem with the old appliances that need to be toted away after the new appliance has been sold, delivered and installed. It is no longer an option to drop them in dump sites, and they don’t want them recycled through second hand sellers. ARCI is the premier environmentally sound recycler of these old appliances, and is now working with GE and Home Depot to collect these items and recycle them in a special plant in 12 Northeastern states. GE wants to expand this program in the rest of the country. Carbon credits alone will add to the bottom line, a wholly new factor in ARCI’s profit mix. In an ordinary market the stock would be selling at $10 on last year’s earnings and would certainly be double today’s prices on this year’s expectations.

“For those remembering last year’s recommendation, Cover-All Technologies (COVR), this stock, too, has fallen back to the recommended price around a buck and it too is continuing to expand its portfolio of insurance-industry software programs. It also is a good buy, and will eventually reward those who have patience.”

- John Gay, The Quiet Investor, June 12, 2012