Profitable Growth Stock in the making

Todays ann is a MAJOR step forward ANO.

ANO's market cap is a tiny $8 million but it has alot to offer. Its becoming a very attractive growth stock and investors now dont need to worry about having their shareholdings diluted as the company will more then likely never need to raise money again.

The company today stated that they expect to be cash flow neutral at an absolute minimum for FY 13/14 which has just passsed and forcast to be prfoitable for FY 14/15 which has just started.

Lets assume during FY 14/15 ANO experience ZERO growth and only turns over revenue from existing deals with Merck and the new North American distributers. (Keep in mind the company stated had DOW the old North American distributer who was acting as a middle man continued to honour the agreement ANO would have turned a profit FY 13/14 instead of being cashflow neutral)

Now that we have appointed new North American distributers who are the same people DOW were selling our product to we will resume FY14/15 with increase revenues straight off the bat. Add to that the ramp up of production to Merck that only started in late May and you can see how ANO will be generating nice profits from here on just on exisitng contracts.

A new bit of information given in todays Ann was that they will soon be appointing a Canandian distributer which will help grow revenues and profits. Lets not forget the companies intentions to crack into the European, Middle East and Chiness markets in the not to distant future.

So here we have a little unknow company with low overheads, high margin business turning a profit which massive growth potential and all for a market cap of only $8m.

By my rough calculations and assuming no other deals are done (which we all know there will be over time) ANO should generate around $2 million dollars profit this current FY.

If we add a distributer in Canada and Europe then the mind boggels at what sort of profits ANO could be making 6-12 months from now.

Working on worst case of $2m profit this FY and puting a very conservitive PE of 10 on ANO which is extreamly low for a growth stock we get a market cap of $20 million or roughly 4 cents a share.

Throw a PE of 20 on it which is much more likely for a growth stock and we get $40m market cap and roughyl 8 cents per share.

These numbers are very conservative and i would expect thats why we have recently seen the Major shareholder who owns over 33% of the company buy another 17.5 million shares along with 2 directors who recently bought another 2 million shares each on market also.

Now the major shareholder and directors havent been buying lately for no reason and i would trust their judgement and faith in where the company is going, after all they have been putting their money where their mouth is which is a very good show of confidence.

All in all i beleive ANO is heavily undervalued based on forward earnings and those who are willing to research this little company and its products may just be extreamly happy in a few months time if they can get in at these very cheap prices imo.