A Brisk Trade in Cars
Investors are on the lookout for stocks unaffected by the September 11 attacks. Many companies have warned they will miss their sales and earnings targets. One that seems to be immune so far is ACLN (ASW ), which ships low-cost used cars from Europe to Africa. Management expects to meet analysts' estimates for the next quarter and for all of 2001, but some pros close to the company think ACLN will exceed expectations for the September quarter as well as for the years 2001 and 2002.
"ACLN's story is an ideal growth and value play," says David Jordon of Axiom Capital Management, who cites the company's growth rates for the past five years: sales up 37% a year on average, and operating earnings up 77%. Gregory Burns of J.P. Morgan Securities expects ACLN to earn $4.75 a share in 2001 and $7.05 in 2002, vs. 2000's $2.93. "The company has seen no disruption in business following the attack," he says. In fact, orders have increased. Africa's demand for low-cost cars, says Burns, should not be diminished by the terrorism in the U.S. "And these countries have little exposure to the weakening U.S. economy," he adds. ACLN plans to aim for new markets: South Africa, India, New Zealand, and certain nations in the Middle East. In addition, it will sell more new cars.
Axiom's Jordon is even more bullish on ACLN's earnings: He figures ACLN will exceed current estimates, and that for 2002, it will earn $8.50 a share. On that basis, the stock, now at 37.90, is trading at an unusually low price-earnings ratio of 4.4. He expects the cash-rich company, which has no debt, to split its stock 2-for-1 this year.
By Gene G. Marcial