Alpha Pro: Microcap Speculation

12/04/2013 7:00 am EST


For 37 years, The Bowser Report has focused on very low-priced and microcap stocks. For those aware of the inherent risks, Cindy Bowser offers her latest "Company of the Month."

Alpha Pro Tech (APT) is a Delaware corporation headquartered in Ontario. APT was our “Company of the Month” feature in August 2000 at $1.31 per share.

The company took almost three years to double; it set a post-recommendation high of $7.16 in 2009.

Now, more than a decade after that first recommendation, APT is trading for $1.70 and there has been little exciting price movement over the past year. However, we believe the relatively stable price presents a good buying opportunity.

Alpha Pro Tech's building supply segment consists of housewrap, a weather-resistant barrier, and synthetic roof underlayments.

These products offer both, reductions in the time it takes to build a home, as well as reductions in energy costs.

The company also makes disposable protective apparel, and infection control products such as facemasks and eye shields. As of the last annual statement, Alpha Pro Tech had 18 US patents.

Sales and net income dropped in 2011. However, the company appears to have found its footing since then. Sales have increased in six of the last seven quarters, and net income has increased in five of the last seven quarters.

Earnings increased 119% and 62% for the three and nine months ending September 30, 2013, respectively. The increase in earnings reflects both increased sales, as well as margins.

Balance sheet-wise, APT is in great shape. The company has no long-term debt and a current ratio of 25.2. The company's book value of $1.83 is also good, and points to the stock being undervalued. At the very least, the company's balance sheet provides a safety net.

Continuing to add value, Alpha Pro has been buying back shares, recently expanding its share buyback program by $2 million.

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