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Skousen: Collectors Universe
04/16/2004 12:00 am EST
Mark Skousen, a leading economist and editor of Forecasts & Strategies, is also an expert at collectibles and numismatics, which provides him with added insight into his recommendation for Collectors Universe. Here's his latest update.
"Collectors Universe (CLCT NASDAQ) jumped sharply last month, powered by
February's announcement by new CEO Michael Haynes that Collectors was shedding
all its commerce businesses and focusing exclusively on grading and
authenticating services for coins, stamps, autographs, and other suitable
collectibles. The commerce businesses, such as the buying and selling of coins
and currencies, were traditional money losers for Collectors, while the grading
and authentication services are nothing short of money machines. Imagine no
inventories, no accounts receivables, and a steadily increasing demand for its
"Collectors Universe will now focus entirely on its money-making business, which is grading and authenticating coins, stamps, baseball cards, and other collectibles through its certification programs. Last quarter these businesses accounted for $5.8 million in revenues, up 40% from the previous quarter, and added five cents in earnings to the company. Clearly, Haynes is making the right decision by restricting his company to grading and authentication services. That's where the money is. Van Simmons, president of David Hall's Rare Coins and a major Collectors investor, told me that Collectors Universe will be announcing new deals shortly with other collectible fields suitable for authentication services. Van said Collectors will earn over $20 million in cash by year end, about $4 a share. CLCT remains a buy."
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