AERT

[eliteG]

AERTA(nasdaq) - Advanced Environmental Recycling Technologies Inc.

Mkt Cap:           104.95M
Float:                  30.41M

Profile:  Advanced Environmental Recycling Technologies Inc. (NASDAQ: AERTA) was established in 1989, and we develop, manufacture, and market our composite building materials to be used in place of traditional wood or plastic products for exterior applications in building and remodeling homes and for certain other industrial or commercial building purposes.

website: http://www.aertinc.com/


Fundamentals and News

This year AERTA is positioned to bring in much more revenue than its mkt cap!  A stellar earnings report was released on May 15:

AERT Announces First Quarter Results
Monday May 15, 5:13 pm ET
http://biz.yahoo.com/bw/060515/20060515006314.html?.v=1

Highlights:

- net sales for its first fiscal quarter, ended March 31, 2006, increased to $27,665,249 from $19,943,530 for the comparable period of 2005, a 39% increase.

- Income before taxes increased 75%

- Fully diluted earnings per share were $0.02 for the first quarter of 2006, compared to $0.01 for the first quarter of 2005.

- The increases were attained from the existing manufacturing facilities, as the Company's new third composite extrusion facility was not in operation during the quarter.

------------------------------------

Conference Call Highlights:(I listed the following points in chronological order as discussed) http://www.aertinc.com/investor.asp

-revenues increased primarily due to increased factory output and higher pricing(key to revenues is more capacity)

-board has approved share buyback of $3million( board is focused on no more shareholder dilution, prices are attractive right now)

-looking at sites for additional facilities(management is confident on demand)

-preparing to introduce new products(major additions should propel company, quantum leap is set to occur by Jan/Feb homeshow next year)

-continue to gain market share

-capacity increase will help in synergy, (nich is exterior and a lot of products go together in this market and have been limited due to production)

-the focus is #1 on current customers(current customers are growing, good management focus)

-increase in pricing 8%.. decking 10% and more(strong demand)

-continue to expand on R&D for recycling(solid companies focus on their unique technologies)

-constant theme EXPANSION

-unique situation for the company in recycling industry (many benefits..not sure exactly what)

-debt/equity ratio very happy about (working toward +work capital)

-new facility will be full swing July $25M additional revenues at first and $100M total (every 25M additional revenue will cost 3-4 Miillion investment)

-Q3 will add 15-20% more capacity (from work to existing production facilities)

key points: #1 the company's products are hot(increases in sales and pricing), company is adding facilities(good debt/equity), adding facilities will also increase product synergy(as many are related and have been held back by production limitations) company is introducing new products(set to make a quantum leap), board finds current price attractive(share buyback)


Technicals
AERTA has a very powerful chart on all time frames.

Long-term
On the long-term chart AERTA exhibits a constantly uptrending support line.  This indicates investor loyalty and happiness and that could only happen if those investors are satisfied with management decisions.  Price is springing from a solid triple bottom type base with a sustained volume increase.  Resistance points at 2.75 and 3.50 are within reach.. and once they are broken we have a blue sky breakout.


Medium-term
On the medium-term chart AERTA has broken out of its 52-week high as well as its ascending channel.. a very powerful move.  This was done on over 2x avg volume but not an extreme amount of volume that would indicate exhaustion.  Moving averages are all below a key bullish sign.


Short-term
On the short-term chart AERTA portrays lots of bullish momentum in its text book cup w/handle pattern.  Notice how the chart runs up, then builds a 4 month cup, week-long handle and broke out on thursday.  This breakout area(2.55) should provide strong support.



Trade Plan

AERTA has so much going for it we need to have it in both of our portfolios.  This play may take time to develop as the company must deliver in its earnings reports.  If this stock appreciates too fast we will look to sell and buy back again lower.  We hope to hold AERTA for quite some time.  Its amazing to see a stock completely resistant to the recent market downturns.  Even in a bear market there will be star stocks.. we think we may have found one with AERTA.

We will buy AERTA at or near mkt open on 5/19

[eliteG]

AERTA(nasdaq) - Advanced Environmental Recycling Technologies Inc.

Mkt Cap:           104.95M
Float:                  30.41M

Profile:  Advanced Environmental Recycling Technologies Inc. (NASDAQ: AERTA) was established in 1989, and we develop, manufacture, and market our composite building materials to be used in place of traditional wood or plastic products for exterior applications in building and remodeling homes and for certain other industrial or commercial building purposes.

website: http://www.aertinc.com/


Fundamentals and News

This year AERTA is positioned to bring in much more revenue than its mkt cap!  A stellar earnings report was released on May 15:

AERT Announces First Quarter Results
Monday May 15, 5:13 pm ET
http://biz.yahoo.com/bw/060515/20060515006314.html?.v=1

Highlights:

- net sales for its first fiscal quarter, ended March 31, 2006, increased to $27,665,249 from $19,943,530 for the comparable period of 2005, a 39% increase.

- Income before taxes increased 75%

- Fully diluted earnings per share were $0.02 for the first quarter of 2006, compared to $0.01 for the first quarter of 2005.

- The increases were attained from the existing manufacturing facilities, as the Company's new third composite extrusion facility was not in operation during the quarter.

------------------------------------

Conference Call Highlights:(I listed the following points in chronological order as discussed) http://www.aertinc.com/investor.asp

-revenues increased primarily due to increased factory output and higher pricing(key to revenues is more capacity)

-board has approved share buyback of $3million( board is focused on no more shareholder dilution, prices are attractive right now)

-looking at sites for additional facilities(management is confident on demand)

-preparing to introduce new products(major additions should propel company, quantum leap is set to occur by Jan/Feb homeshow next year)

-continue to gain market share

-capacity increase will help in synergy, (nich is exterior and a lot of products go together in this market and have been limited due to production)

-the focus is #1 on current customers(current customers are growing, good management focus)

-increase in pricing 8%.. decking 10% and more(strong demand)

-continue to expand on R&D for recycling(solid companies focus on their unique technologies)

-constant theme EXPANSION

-unique situation for the company in recycling industry (many benefits..not sure exactly what)

-debt/equity ratio very happy about (working toward +work capital)

-new facility will be full swing July $25M additional revenues at first and $100M total (every 25M additional revenue will cost 3-4 Miillion investment)

-Q3 will add 15-20% more capacity (from work to existing production facilities)

key points: #1 the company's products are hot(increases in sales and pricing), company is adding facilities(good debt/equity), adding facilities will also increase product synergy(as many are related and have been held back by production limitations) company is introducing new products(set to make a quantum leap), board finds current price attractive(share buyback)


Technicals
AERTA has a very powerful chart on all time frames.

Long-term
On the long-term chart AERTA exhibits a constantly uptrending support line.  This indicates investor loyalty and happiness and that could only happen if those investors are satisfied with management decisions.  Price is springing from a solid triple bottom type base with a sustained volume increase.  Resistance points at 2.75 and 3.50 are within reach.. and once they are broken we have a blue sky breakout.


Medium-term
On the medium-term chart AERTA has broken out of its 52-week high as well as its ascending channel.. a very powerful move.  This was done on over 2x avg volume but not an extreme amount of volume that would indicate exhaustion.  Moving averages are all below a key bullish sign.


Short-term
On the short-term chart AERTA portrays lots of bullish momentum in its text book cup w/handle pattern.  Notice how the chart runs up, then builds a 4 month cup, week-long handle and broke out on thursday.  This breakout area(2.55) should provide strong support.



Trade Plan

AERTA has so much going for it we need to have it in both of our portfolios.  This play may take time to develop as the company must deliver in its earnings reports.  If this stock appreciates too fast we will look to sell and buy back again lower.  We hope to hold AERTA for quite some time.  Its amazing to see a stock completely resistant to the recent market downturns.  Even in a bear market there will be star stocks.. we think we may have found one with AERTA.

We will buy AERTA at or near mkt open on 5/19

[yukiii]

Will wait for a pullback on this. fully valued at $2.60 for 2006
$3.50 2007
$5.00 2008

[eliteG]

Will wait for a pullback on this. fully valued at $2.60 for 2006
$3.50 2007
$5.00 2008

...perhaps this is the case yukii but stocks that are growing so strong should not be fully valued.. one should have to pay a premium and the chart says take-off.

[Terliso]

I like this one.. AERTA is looking good If market will bounce tomorrow and I believe AERTA will also follow

[nullzero]

With the way the market goes who knows which way it will go... I bought into aerta july of 05 I was very new at stocks and researched into it seeing that HD and other building material stocks were taking off I purchased 8k shares at 1.35 when it was trading flat for a while. I was keeping an eye on it ever since the first break out of the 1.50 where I sold sometime around that. There is some die hard longs in aerta in since early 2000. I dont know if profit taking is going to happen yet but one thing for sure is G knows how to pick good stocks . Just MR market decides where those go sometimes.

[Terliso]

AERTA4

[Terliso]

AERTA5

[Lucas Scott]

Why buy for both portfolios again? If it's long term it should be in Value and if it's for a trade then it belongs in Fire. Also if it goes in both ports there should be different strategies, like a tighter stop on the Fire position for example. That didn't happen with NMKT and GV - the other stocks that went in both ports. I don't see much distinction anymore between the Value and Fire strategies. Maybe these ports should just be combined into one. JMHO. Good luck AERTA longs.  

[Terliso]

Why buy for both portfolios again? If it's long term it should be in Value and if it's for a trade then it belongs in Fire. Also if it goes in both ports there should be different strategies, like a tighter stop on the Fire position for example. That didn't happen with NMKT and GV - the other stocks that went in both ports. I don't see much distinction anymore between the Value and Fire strategies. Maybe these ports should just be combined into one. JMHO. Good luck AERTA longs.  

Very Good Question

[nullzero]

I agree value and stocks on fire seem to much of the same. When I think of value I think longterm growth with high growth companies and stable companies with dividends etc. 1-5 year holds for alot of stocks and long term plans and goals. When I think of stocks on fire I think short positions, long positions, momentum stocks, swing plans, short gaps, short on news, etc.

[metro]

yukiii,


Stock prices and "value" are based on a ton of things.

If you use PE some stocks are at 4 and some at 150

If you use price to sales or price to book or any other method you will find the same wide variance. Most stocks are really priced only by supply and demad and demad goes up when prople think the price in the future will be higher then the price of today.

You post "fully valued"

How are you arriving at that idea? And how is it helpful in determining when adn if to buy a stock?

[usedcasting]

This question of long and short or value and fire is a good one. I have been curious about this as well. I asked G yesterday on the GV board yesterday about the value aspect of GV, whether it still remained or not and the reply was that decision would now have to be made on a technical basis. Ok, this is confusing. I do get it a bit, a breakdown is a breakdown, and therefore get the hell out, but value and fundamentals are a long term perspective and one which the core belief is that if you are buying it, you are buying at a value lower than the true value of the stock and whether the stock goes below your purchase price or not, in time you will get back to value. I tend to look more to value than momentum and GV, NSTC (Superior Value), Nmkt and SVL were all presented as value. Maybe there needs to be some clarification up front on combination V & F picks as well as value only, as to how these trades are different than any momentum play. Also with the board picking these value choices I have assumed to this point that Michael is doing DD on these picks. Is this the case.

Thanks

uc.

[yukiii]

I have been doing very well with buy value stocks bought DTKL, XRTX yesterday these are good buys.
AERTA would be a sell today should peak today. It would have been a great buy in the low 2's

There seems to be a problem with what you call value stocks and what to do with them.
Also a problem with timing value stocks. Example now is GV this is a good buy here at $1.56 SVL
also a good buy here at $4.00 instead of selling good companies when they go down 10% or so and nothing has changed I would also double down and ride the next wave up.
Also adding more  IMOS and CRUS today don't sell good value stocks.

yukiii,


Stock prices and "value" are based on a ton of things.

If you use PE some stocks are at 4 and some at 150

If you use price to sales or price to book or any other method you will find the same wide variance. Most stocks are really priced only by supply and demad and demad goes up when prople think the price in the future will be higher then the price of today.

You post "fully valued"

How are you arriving at that idea? And how is it helpful in determining when adn if to buy a stock?

[eliteG]

Why buy for both portfolios again? If it's long term it should be in Value and if it's for a trade then it belongs in Fire. Also if it goes in both ports there should be different strategies, like a tighter stop on the Fire position for example. That didn't happen with NMKT and GV - the other stocks that went in both ports. I don't see much distinction anymore between the Value and Fire strategies. Maybe these ports should just be combined into one. JMHO. Good luck AERTA longs.   

The dual placement stocks usually represent both an amazing technical and fundamental story and have done very well.  Perhaps you are confused in that a value play can also be a quick trade.  I may try to trade this position differently in value but that possibility must present itself.

We have been trading for quite some time together, you and 3SOF...Lucas.  It would be ok to hear something positive from you for once.  Just so you know everybody here is on the same side.

yukiii,


Stock prices and "value" are based on a ton of things.

If you use PE some stocks are at 4 and some at 150

If you use price to sales or price to book or any other method you will find the same wide variance. Most stocks are really priced only by supply and demad and demad goes up when prople think the price in the future will be higher then the price of today.

You post "fully valued"

How are you arriving at that idea? And how is it helpful in determining when adn if to buy a stock?

(Applaud) Great post Metro.     Everyone finds value according to their perspective.

This question of long and short or value and fire is a good one. I have been curious about this as well. I asked G yesterday on the GV board yesterday about the value aspect of GV, whether it still remained or not and the reply was that decision would now have to be made on a technical basis. Ok, this is confusing. I do get it a bit, a breakdown is a breakdown, and therefore get the hell out, but value and fundamentals are a long term perspective and one which the core belief is that if you are buying it, you are buying at a value lower than the true value of the stock and whether the stock goes below your purchase price or not, in time you will get back to value. I tend to look more to value than momentum and GV, NSTC (Superior Value), Nmkt and SVL were all presented as value. Maybe there needs to be some clarification up front on combination V & F picks as well as value only, as to how these trades are different than any momentum play. Also with the board picking these value choices I have assumed to this point that Michael is doing DD on these picks. Is this the case.

Thanks

uc.

While we always discuss a position.. the analysis is mostly done by the team member posting.  The clarification is not in the portfolios but in the original trade analysis, the updates and by the trader who posts the pick.

Value is not always a long-term play.. it is sometimes a quick adjustment.  The key is to have nice timing.