GGC

[David Randolph]

As we've been discussing, there's a new buying process for the Stocks on Fire Portfolio. Now stocks need to go through 3 phases before being bought for the Portfolio. I hope this improves the selection and allows for a longer holding period (and a better win/loss ratio going forward).

Here's the initial analysis I made on GGC, which showed a positive outlook for the stock:

http://video.google.com/googleplayer.swf?docId=2850153516283947298&hl=en

Next on this thread I'll study SEC forms for GGC, to find out more about its business and see about risks not usually disclosed on press releases.

[David Randolph]

Here's a Merril Lynch analyst talking about buyout rumors and cutting estimates for GGC:

• Georgia Gulf Rises on Buyout Speculation
AP (Wed, Dec 20)

I wrote an e-mail to investor's relations to know if that huge 1990 gap down was a stock split or not. If it were a stock split, that would change the long term chart dramatically, improving the long term bull case.

• Georgia Gulf Redeems Royal Group's Medium-Term Notes
Business Wire (Mon, Nov 6)

• Georgia Gulf 3rd-Quarter Profit Drops
AP (Fri, Oct 27)

The company missed expectations by a lot in Q3. Analysts got negative on the stock just recently.

The past probably won't be a good measure for GGC's future performance, because they just made a huge acquisition:

«Acquisition of Royal Group. On October 3, 2006, we completed the acquisition of all of the outstanding common stock of Royal Group for CAD$13.00 per share in cash ("CAD$" meaning Canadian dollars), or a total purchase price, including assumed debt and debt retired in conjunction with the closing, of approximately $1.5 billion. The acquisition was financed entirely with new debt, including $500 million in aggregate principal amount of unsecured 9.5 percent senior notes due 2014, $200 million in aggregate principal amount of unsecured 10.75 percent senior subordinated notes due 2016 and $800 million principal amount of floating interest rate term debt under our new Senior Secured Credit Facility due 2013. Royal Group, headquartered in Ontario, Canada, is a leading North American manufacturer of vinyl-based building products, including custom window profiles, decorative mouldings, siding, pipe fittings, and other home improvement products.»

So, the company is diversifying from its original chemical business, going to the home improvement sector. I'm not sure what to think of this move. Long term debt will increase substantially and the interest to be paid is high.

The reasons that caused my outlook to be positive (apparently low valuation accordingly to past results) may no longer be valid, because with this $1.5 B merger we're talking about a whole new company going forward.

I'll keep an eye on technical and fundamental developments going forward, but I'm afraid GGC didn't pass this phase.

Tomorrow or so I'll move this thread to the Members Corner.

[njshiva]

David,

WSJ says last stock split date is 1/27/89

http://online.wsj.com/quotes/main.html?symbol=ggc&type=usstock+usfund

[setravis]

GGC - Momentum
4 day brush fire...

Georgia Gulf Corporation manufactures and markets chlorovinyls and aromatics chemicals, and vinyl-based building and home improvement products in the United States and internationally.


52wk Range: 0.22 - 8.16
Volume: 2,985,998
Avg Vol (3m): 474,203


Technicals
Close Above the 50-day MA
Close Above the 13-day MA
Percentage Gainer

Last Price Quote is:
198.74%above 13-day MA
92.45%above 50-day MA
RS Rating: 83 

Fundamentals
Analyst Upgrade to Hold

Key Data:
Market Cap (M): $10.34 
P/E Ratio: 12.43 
PEG Ratio: N/A 
Next Earnings: 05/05/2009
Last Analyst Rating: Hold