Skousen: Collectors Universe

04/16/2004 12:00 am EST

Focus:

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

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 services.

"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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