Today, we need to revisit again our assessment regarding Bulova Technologies Group, Inc. (OTCMKTS:BTGI), the holding company.
We had a look at the stock chart and identified an increase in the amount of shares that changed hands recently. On some day days, more than 40 million shares changed hands.
We firmly believe that volume registered by the exchange is one of the best indicators to detect market interest. That’s why we thought that a new update would interest our readers.
Have a look at it and form your own opinion:
For those who are getting to know the company here, we are providing a brief background now.
The company operates very different businesses. It provides munitions, weapon systems, and combat systems for the defense industry. It also designs and sells precision CNC machining centers. Furthermore, the company is also specialized in the trucking business with over 105 trailers, and 90 trucks. It is headquartered in Largo, Florida.
If you remember well, in our previous article about BTGI, we mentioned that the market reacted much to the announcement of the acquisition of a trucking company. We noted that it was logical, as the deal was expected to increase the amount of trucks and trailers owned by 30% and 38% respectively.
In this new update, we will see that the company continues its expansion in the trucking business. Additionally, it reduced debt, which we and the market should have appreciated. Finally, Mr. Stephen L. Gurba, CEO and President, gave an interview, which we will assess in this update.
On July 12, 2017, the company noted the acquisition of 10 additional trailers to supplement its subsidiaries’ fleet of tractors and trailers. A bank called People’s Bank is financing the acquisition. We appreciate the news, as more trailers will automatically increase revenues. It is a good news, thus the market seemed to celebrate it by pushing up the share price.
On July 21, 2017, more transactions were noted. In this case, it highlighted the completion of the acquisition of Big Red LTL Transport, Inc., a New Jersey based trucking company with 27 trucks, 38 refrigerated trailers, and 38 customers, with hubs in both Netcong, New Jersey, and Chicago, Illinois. The transaction was financed by the same bank.
Please note the words of Stephen L. Gurba, President and CEO of BTGI, about the expected sales:
“Big Red should increase our overall sales by $12 million annually. Our transportation business should now increase in our fiscal 2018 to well over $40 million in sales annually. We continue to look for strategic acquisitions in the transportation business.” Source
The market pushed up the share price again in July as a result of this announcement. The latest annual report shows $18 million in total revenues, but next year it will increase by 122%. Thus, the market reaction makes a lot of sense.
On August 30, 2017, even more news were reported. The company announced the sale of part of its aged debt held by creditors and its conversion into common shares.
The CEO explained the transaction with the following words:
“Current shareholders will see an increase in the number of the Company’s shares outstanding, but each newly issued share represents both reduced debt and cash preserved by the Company.” Source
Finally, on October 16, 2017, the CEO gave an interview to the Uptick Network Stock Day Podcast. We believe that the most significant was his assessment of the recent acquisitions, and the recent sale of Bulova Technologies Ordnance. Additionally, he talked about the company’s debt reduction plans.
We highlight his final words when he said that another trucking acquisition announcement is coming. Thus, we will need to be alert.
On the top of it, he said the following words about trading on the NASDAQ:
“We’re looking at items here which could greatly increase our sales and if we clean up the balance sheet there’s no reason why we couldn’t move up to the NASDAQ.” Source
In our opinion, the market did not really assess these final words. Trading on NASDAQ would greatly increase the company’s reputation among investors. Additionally, cheaper financing could be received and more M&A opportunities could be found. It is very good news that the CEO mentioned it.
Currently trading with a market cap of $1.4 million, BTGI is an exciting story among small caps. With $17.9 million in assets and $40.2 million in liabilities, new debt reductions are welcomed as it strengthens the company’s balance sheet.
Regarding the revenues, if the $40 million in revenues is finally delivered, we should see a large share price spike.
To sum up, keep a close eye on this name, as its management has chosen a very interesting direction and the market is looking closely!
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Image courtesy of Michael Cereghino via Flickr
Disclosure: We have no position in BTGI and have not been compensated for this article.