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I started buying Commerce Planet
again today. There is a comment and a chart in the BLOG for your
review. All of a sudden, the stock just looks great to me. It's behaving
as if something good is going on. I don't know what, but it is finally
showing signs of life back to the upside.
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Here's the second in the series of
two "Old Economy" ideas that I'm introducing this week. The numbers and
potential growth over the next five years are very compelling for today's
idea. This company should have many quarters of growth out in front of
it, and the stock is just starting to be discovered. For your consideration:
Is Back: Check Out the 787
Did you know Boeing (NYSE: BA)
used to manufacture about 600 planes annually pre 911? Currently, they
are building about 350 per year, but that number is going back to the 600
level in short order.
You are looking at an image of the
new Boeing 787 Dreamliner- probably the world's most advanced
commercial aircraft. Airlines all over the world will start flying them
This bad boy runs a cool $1/4 billion,
carries about 250 passengers, has a range of 8,000 nautical miles, is made
of 50% composite materials, and is 20% more fuel efficient than any of
Boeing has orders in hand
for over 600 of these beasts, and they are going into full production
right now. Deliveries start in '08. Production is scheduled out for the
next 5 years.
Boeing (NYSE: BA), who's previous
all time high (2001) was $70, hit $100 this year- a new all time high for
this titan of aviation. The market believe Boeing has nothing but
robust business and growth over the next five years. It's time to look
at a company that will ride Boeing's coattails.
How does this information apply to
today's new idea?- read on McDuff, and I'll circle back a few paragraphs
Companies (OTC BB: NCNC): An Old Economy Explosion of Growth
Mining Equipment, windmills, oil
drilling hardware, aerospace, heavy equipment- these areas are exploding
with globalization demand, and California based New Centuries Industries
right in the middle of it. Sales and profits are exploding, and there is
nothing but growth ahead for this idea.
Here's what they do, and it's as
old economy as it gets- the make stuff round. The take a big piece of metal,
make it a smaller piece of metal, and make it round to 1/10,000th
of an inch. They make stuff round, and they sell the machines that make
stuff round to other component manufacturers.
Find me a big name with big infrastructure
and I will find you parts provided by NCNC. Component customers
include names like GE, Rolls Royce, Caterpillar, Exxon, Chevron, Apache,
etc all use their products.
Anything that is round and needs
to spin with precision can be made on their machines. This gigantic Caterpillar
(NYSE: CAT; another stock near an all time high) tractor has
components made on NCNC machines. The oil rig you see pictured-
it has components that spin at a high rate of speed as they drill. This
oil rig has pipes and flanges that can go down into the ocean floor over
2 miles deep. Anything that is not perfectly round to 1/10,000th of an
inch will stop the drilling process. NCNC machines are making the
components found on this rig.
Here's an interesting alternative
energy idea: Windmills. GE is geared up to manufacture about
1500 windmills per year- with world wide demand exploding for alternative
energy ideas, the market is closer to 10,000 windmills per year, and GE
can't make them fast enough.
At a recent American Wind Energy
Association trade show, there were six new windmill manufacturing companies
at the show, ready to compete with GE in a market it has owned.
Demand in the US is expected to be about 3,000 units next year- double
Guess who makes the machines that
make the round parts that spin at a high rate of speed for all these manufacturers
- you guessed it: NCNC.
Best Part: How Fast Is NCNC Growing?
How's this: almost doubling in size
from last year. Here are the numbers:
In Q1 '07, NCNC delivered
million in revenues- that's up from $1.7 million in the
same Qtr in '06. That's an increase of 82%. Very nice growth. On
the profit side, there were huge strides as well. NCNC delivered
about $800,000 ($.065 per share in profits), which you can
derive by subtracting the funny money non-cash expenses, which were one
Here's the most exciting part of
the story- there are only 12.2 million shares I&O, and at $.65
the market is only valuing the company at $7.93 million. Against
an annual revenue run rate of about $12.5 million, this stock is
cheap, cheap, cheap, and under followed.
The stock has enjoyed a pretty good
year with the resurgence of old economy stocks. Despite having come up
from the $.25 level earlier this year, I believe the recovery phase is
just getting underway. The stock spent a fair percentage of 2006 in the
$1 range when their corporate performance was far more anemic.
Here's another good chart ready for
a move to the upside. The stock made a big move in April, and has since
starting drifting down. It is camped on a perfect 38.2% retracement.
for the next leg up in light of today's news. Read on.
to $1 Plus: Here's Why
Aside from organic growth, I believe
there is a major catalytic event coming up. It's time to come full circle
back to the Boeing 787 Dreamliner. Pictured is a modern jet engine
The engine in the 787 will
be 12 feet in diameter. There are a series of circular pieces of metal
that goe around the entire turbine. The giant fan blades of the jet engine
spin within those metal rings. The metal rings have to be perfectly round-
perfect to within 1/10,000th of an inch. Why- because if it isn't perfect,
it will vibrate. If it vibrates it will fall off. It it falls off; well,
it just can't fall off. Boeing, the airline, the FAA, and the passengers
just wouldn't like that.
There are over 600 787s on order.
The Airbus A380 is coming out to compete- same thing- 12 ft diameter engines
designed by GE or Rolls Royce. Both use NCNC machines to make the
Also on the horizon is the Boeing
777 freight liner. A long haul cross ocean aircraft with only two engines-
this is new in aviation. Until recently, the trans ocean planes were mandated
to have 4 engines. More 12 ft engines to be built.
Here's what you need to grasp on
this industry. In the past, companies like GE and Rolls Royce
would award 5 year contracts to component manufacturers. No more. Now,
they order as needed. Much tougher for the manufacturers to gear up, which
means much less readily available supply.
Today, just after the market closed,
announced it has formed a joint venture partnership to manufacture the
key component for this jet engine. Boeing is going to need 1200 of them
to fill their current orders, and Airbus is coming in right behind.
NCNC is teaming up in a joint
venture with WK Machine to manufacture components for the new Boeing
787 and Airbus A380 and A350 aircraft. WK has been manufacturing aircraft
parts for thirty years. WK will provide the production, and NCNC
will provide specialized machines that can get the work done.
WK is located in Southern California,
a mere 18 miles from where many of these gigantic engines are assembled
before shipping on to the aircraft manufacturer.
Oh- and one more kicker- the annual
Paris air show is next week- new plane orders will be announced there as
well. This could help NCNC.
If you like an old economy story
with some really good numbers and explosive growth for the next five years,
own some NCNC. Initial price target $1; SSL $.45.
Price target could go up when Boeing orders start to flow.
Here is the complete text of today's
release for your review:
|Press Release Source:
New Century Companies, Inc.
New Century Forms
Joint Venture With W K Machine to Manufacture Specialized Jet Engine Components
Wednesday June 13, 4:01
LOS ANGELES, CA--(MARKET
WIRE)--Jun 13, 2007 -- New Century Companies, Inc. (OTC BB:NCNC.OB - News),
a leading manufacturer and re-manufacturer of machine tools, today announced
that it has formed a Joint Venture with W K Machine, Inc. to manufacture
specialized jet engine components for the Boeing 787 DreamLiner, Airbus
A380 and A350 aircraft.
New Century will supply
the machining equipment to manufacture large components of the General
Electric and Rolls Royce engines slated for use on the new Boeing 787 Airbus
A380 and A350 aircrafts. W K Machine will act as the operator of the JV.
They have over 30 years of experience in manufacturing jet engine components.
W K Machine is well positioned to handle the potential order backlog created
by the approximately 1,100 planes which have been ordered by the major
New Century has developed
specialized large vertical turning lathes (VTLs) to handle the components
which can measure 12 feet in diameter and are produced to have zero tolerance
for error to within 1/10,000th of an inch. The process to manufacture one
specific part for the jet engines can take over 85 hours of machine time
David Duquette, President
and CEO of New Century, commented, "We are excited by the opportunity to
work with W K on this project. We recognized the potential opportunity
in the market to produce the large components being developed for use by
the aircraft engine manufactures. The industry currently has a lack of
qualified domestic suppliers equipped to handle the specialized work which
has provided an entry for our new JV. The timing of the creation of our
JV is ideal to capture early market share as deliveries for the new Dreamliner
aircraft are scheduled for early 2008. Our new joint venture will create
an additional revenue stream for New Century beginning in the late third
quarter of 2007. We are excited to be further diversifying our product
mix while positioning the Company for future growth."
About New Century Co.
New Century Companies,
Inc. is one of the leading U.S.-based makers of machine tools, primarily
vertical boring mills and large lathes such as vertical turning centers
(VTCs). It specializes in re-manufacturing, starting with existing major
castings and fitting them with state-of-the-art, computer-controlled equipment.
These products generally cost 40% to 60% less to make than new ones. New
Century passes these savings on to its customers, which include such leading
manufacturers as General Electric Co., General Dynamics Corp., Siemens
AG and Gardner Denver. New Century machines are used to manufacture jet
engine components, airplane landing gear parts, power generation equipment,
oil and gas production components and construction materials, to name just
a few applications. New Century's production facility is in Santa Fe Springs,
Visit New Century's Web
site at www.newcenturyinc.com.
This release contains
forward-looking statements which involve known and unknown risks, delays,
uncertainties and other factors not under the Company's control, which
may cause actual results, performance or achievements of the Company to
be materially different from the results, performance or other expectations
implied by these forward-looking statements. These factors include results
of current or pending research and development activities, actions by the
FDA and other regulatory authorities, and those factors detailed in the
Company's filings with the Securities and Exchange Commission such as 10K,
10Q and 8K reports.
Alliance Advisors, LLC
Source: New Century Companies,