Wednesday, 18 August 2010

International Water Guard Shares Are A Steal

International Water-Guard (TSX-V: IWG)
Basic Shares: 39.3 million
Fully Diluted: 46.5 million

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A financial analyst who knows International Water Guard’s business inside out is scratching his head trying to understand why the company’s shares are trading well below fair market value.

Fundamental Research analyst Siddharth Rajeev pointed out in his most recent report that IWG’s working capital of $2.16 million is nearly equal to its Aug. 18th market cap of $2.36 million.
On Aug. 18th, IWG shares closed the day at $0.06 but Mr. Rajeev pegged the fair value of the shares at five times that - $0.30 cents. “IWG continues to be significantly undervalued,” Mr. Rajeev wrote in his Aug. 9th report.

IWG’s business is selling high-tech water treatment and sophisticated water storage technology for corporate and government jets, plus the well-heeled private jet owners around the world. IWG continues its efforts to break into the much larger commercial airline business but admittedly it is a long and grinding road.
Mr. Rajeev noted that transaction activities and the value of mergers and acquisitions in the aerospace and defense industry, “increased significantly year over year in the first half of 2010.” Along with that growth and the expectation that the US dollar will gain strength, Mr. Rajeev expects IWG will benefit from both the aviation industry recovery and a higher-valued U.S. dollar, the latter because IWG’s technology is sold in US dollars.
A wild card in the mix is IWG’s continuing merger and acquisition efforts where the business plan is to leverage its relatively strong cash position and its solid core business to achieve significant growth.