NGA

[David Randolph]

I took this from an article:

«The American Society of Civil Engineers estimates it would take nearly $190 billion to fix more than 70,000 bridges deemed "structurally deficient.»

That's a lot of money and NGA is at the center stage of the bridge repair and preservation industries.

Anyway, the stock is already trading at just 8.4 times earnings. I'll continue holding NGA.

[David Randolph]

NGA rose 3.6% yesterday, but that's still not enough to turn the chart from bearish to bullish. The stock needs to close back above $7.05 and I expect this to happen before the end of the year.

I think people expect some weak seasonality to damage NGA's financial performance in the second half, but I've checked the company's history and there's no "weak second half" beyond 2006. That only happened in 2006 and it wasn't because of seasonality ... I wonder why was it?

I'll study that for the next update. I'll keep holding NGA.

[David Randolph]

I think people expect some weak seasonality to damage NGA's financial performance in the second half, but I've checked the company's history and there's no "weak second half" beyond 2006. That only happened in 2006 and it wasn't because of seasonality ... I wonder why was it?

Hmm, it seems to me that my "fundamentals" service has some erroneous data on NGA. I've looked into last year's SEC filings and saw the company earned $0.14 EPS in Q3 2006 and my service shows just $0.09.

So, it appears there's no seasonality at all in NGA, and the second half may very well be as strong as the first half, or even stronger. Of course, people are very worried about the US economic outlook and most economists expect a recession in early 2008 due to the credit problems, but I don't think that's going to be the case. We'll see.

As for NGA, it is trading at about 8 times earnings, so it is already priced like we're in a long term bear market.

I'll keep holding NGA.

[David Randolph]

Oh oh oh, a 14.2% advance day for NGA, still not enough to bring the Main into the black with this holding. If everything plays out as I think it will, which is NGA breaking out above its short term descending trendline and actually moving up to new all time highs, it will be one of the very first times where the "close the gaps" theory worked perfectly.

Anyway, I've been thinking that the zinc price has been coming off lately (like most commodities) and that will actually provide a boost to NGA's earnings, at least over the short term, because zinc is a cost for the company and probably the company was able to sustain the high price it charges for its galvanizing and coating services. We'll see.

Thinking of the long term, everybody knows the US infrastructure needs more maintenance work, and NGA is there to provide it. A lot of money and effort was put into building infrastructure and commercial property to now see its value erode over the years. Can't be.

The stock is trading at about 10 times earnings now, and growing spectacularly. I'll keep holding NGA for the long term. 

[David Randolph]

We're not out of the woods in NGA yet, but looking much better now. I believe fundamental undervaluation will make it rise and breakout its short term descending trendline. I'll keep holding NGA.

[la-onda]

just fyi:
NGA: Short Interest UP 100.0% to 712.4K in Aug 2007
Friday , August 24, 2007 16:19ET

According to new short interest data from NASDAQ, short interest for North American Galvanizing & Coatings, Incorporated (NasdaqNM: NGA) INCREASED 100.0% to 712,363 shares for the month ended mid-August, 2007.

SYMBOL       JULY          AUGUST          CHANGE       %CHANGE      DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
NGA                    0         712,363        +712,363      +100.00%           3

Based on NGA's 20-day average daily share volume of 346,638, it would require approximately 3 day(s) of buying to cover this short interest.

chart:

[Ramsburg]

Just a quick chart update for NGA:
NGA is trying to reverse it's swing to the upside, and has managed to perform high relative highs and lows during the past few weeks. Although there is a double resistance on the way, I'm talking about the $7.44 level, which is also the ema-50 approximately spot right now. The descending resistance line stands at $8.60.

Portfolio Instructions:
Hold NGA

Best regards,

[Ramsburg]

Chart Update:
Not a good session for NGA which was the worst performer of the Main Portfolio today. Anyway, and assuming this pullback scenario, today's session doesn't change anything, NGA may just need a breath before attempting to break the $7.44 again.

Portfolio Instructions:
Hold NGA

Regards,

[Ramsburg]

Chart update:
NGA was once again the worst performer from the Main Portfolio, closing down the session right no the EMA-200 spot.

Portfolio Instructions:
Hold NGA

Regards,

[David Randolph]

Not a single press release or SEC filing for over a month now. NGA's management is either asleep or working hard to improve the company, without any time left for us, the stock investors. Let's hope it is the second hypothesis.

I didn't expect NGA to fall this hard (I'm losing 21.6% on the stock now) but as it goes down it just gets more attractive from a fundamental standpoint, in my view.

NGA is a $83 M market cap company and if the second half of the year is similar to the first half, it will earn $0.72 per share, compared to $0.39 in 2006. This means the stock is trading at about 9.3 times earnings and growing them by 84% from the year ago levels. This reads "extremely attractive" in my book.

Of course, the big issue is "will the second half be as strong as the first half?"

Well, I don't know for sure, but I think the recent fall in zinc prices will provide at least a short term boost to NGA's earnings, since zinc is the primary cost for the company. Moreover NGA, being a galvanizing and coatings services provider, gets its demand from heavy construction works. And believe it or not, the DJ US Heavy Construction Index is the second best performer of all industry groups over the past 3 months.

So, there are some clues that the second half may very well be as strong or even stronger than the first. That would mean at least $0.72 EPS for NGA in 2007. If we consider the average valuation of the Industrial Equipment & Components industry, which is 19.51 times EPS, I say NGA should close the year at $14.05 to be valued at average.

Impossible? No, because NGA is such a small cap, it wouldn't be unusual for it to run up 100% or so in 4 months.

I'll keep holding NGA.

[David Randolph]

NGA has been tough to hold, because the market hasn't been in agreement with my view of the fundamentals, expressed in my latest update.

But, because I'm trying to use my head to judge my investments and not the chart's trend, I'll keep holding NGA. If I lose trust in the fundamentals, then I'll take my loss, no problem if it is bigger than the 25% loss I have now.

I believe this is the path to also let the winners win, to play stocks with a longer term time frame.

[David Randolph]

And the pain just keeps going on NGA. The stock is trading at a level like the past two remarkable quarters never existed. P/E is below 10 and growth is strong.

I understand the chart looks bearish, but you know how that can change pretty quickly ... I'll keep holding NGA.

[David Randolph]

No news out for NGA since July 31st. The stock keeps slowly sliding. I'll hold it anyway, because I believe that any positive news may change the technical picture completely, since the stock is such an undervalued micro-cap.

[David Randolph]

NGA's volume picked up some as it touched the 200 days SMA support. I expect the stock to rebound strongly from the current levels, because it is so damn cheap, trading at 8.2 times earnings.

I'll keep holding NGA.

[Garoh]

Yes it's very cheap ... it's very important not to close below 5.50 on weekly ..