Our latest "company of the month" is Parks! America (PRKA), which engages in acquiring and operating local and regional theme parks, explains Faris Sleem, small cap and low-priced stock expert and editor of The Bowser Report.
It owns and operates three Wild Animal Safari theme parks located in Pine Mountain, GA; Strafford, MO; and Bryan/College Station, TX. It acquired the Georgia Park in 2005 and the Missouri Park in 2008.
The company acquired its Texas park, Aggieland Safari Adventure Zoo and Safari Park, in April 2020, which has been one of the two vital catalysts in revenue growth. Growth has been on par with the other locations and Texas has already proven to be a phenomenal investment.
Parks! America primarily grows through acquisitions and advertising. Its balance sheet is not as healthy as the typical recommendation but is fantastic for a company with such high revenue growth.
The company currently has $5.6 million in cash and a current ratio of 2.8. However, PRKA does have $5.4 million in long-term debt. The high debt at this point is standard for a growth stock and would only be concerning if growth slowed substantially alongside an increase in debt.
With both long-term debt and total liabilities trending downward, PRKA can continue to allocate capital to its marketing budget which will be vital to the company's success.
PRKA insiders own 73% of the outstanding shares, which is rare for an OTC-listed stock. While there are no major institutional investors, the high level of insider ownership is reassuring for long-term investors.
The stock’s exceptional performance over the past few months would typically prompt insiders to unload shares, but that is not the case. Insiders have purchased 38,000 and 635,550 shares within the last three months and year, respectively. Most of this activity consists of direct purchases and the most recent one was at $0.58 per share.
Board member Charles Kohnen and CEO Dale Van Voorhis hold 37,836,500 shares or 50% of the outstanding shares. Kohnen has been consistently buying shares over the years and accounts for all of the insider purchases in 2021.
The two main risks of investing in PRKA are its overvaluation and OTC listing. The stock is up 82% in just two months following blowout quarterly earnings and increased attendance.
While it is overvalued, it is alright to pay a higher premium as long as net income does not reverse its upward trend. We believe that $0.50-$0.60 per share is a reasonable entry point, but expect it to trade well over $1 down the road.
The OTC Pink Sheet listing adds risk from an awareness standpoint because the company is not required to file financial reports on any specific schedule. However, we expect the stock to uplist in the future, and management has a proven track record of transparency and filing on time.
In conclusion, PRKA is growing rapidly and is showing all the signs of a company with huge potential. Increased consumer spending rates and plateaued COVID-19 infection rates in the U.S. create a sales outlook. As long as growth maintains and long-term debt continues to decrease, we are confident PRKA will keep rewarding its shareholders.