Continental Materials Corp (CUO)

Grabar Law Office investigates possible wrongdoing and/or breaches of fiduciary duty by COU's Board of Directors in connection with the efforts of Bee Street Holdings LLC (“Bee Street”) to acquire the public minority interest in the Company in a tender offer (the “Buyout”). The Buyout is a freeze-out of the public minority interest in CUO and is subject to entire fairness review. We believe there is a credible basis to believe that the Buyout is being consummated at a price and via a process that is not entirely fair to CUO’s public stockholders.
If you are a current $CUO shareholder and would like to learn more, message me here or email me at jgrabar@grabarlaw.com
Josh Grabar
Grabar Law Office

Any thoughts on the news today, littlefish? Doesn't seem that material to me, but who knows. I just want this lawsuit over and finished with considering all the money they spent to litigate it. And I'm not sure why they even initiated this lawsuit to begin with if they end up having to pay money to Valco. That is pretty much the opposite of what should happen when you sue someone.

CUO Pueblo and Colorado Springs area finally seeing some public sector road projects picking up.

http://www.krdo.com/news/project-engineer-lays-out-plans-for-i25-cimarron-interchange-project/41357438

https://www.codot.gov/projects/i25cimarronDB/fact-sheets/i-25-cimarron-fact-sheet-july-2016.pdf

The SDS agreement funds might help a little as mentioned previously (think it's something like half billion dollars over 20 years roughly). Here's a smaller project around Pueblo that is funded by SDS dollars and involves the construction of the SDS pipeline.

http://www.krdo.com/news/Road-widening-project-underway-in-Pueblo-West/41357692

Will definitely be beneficial if Pueblo can start carrying more weight with projects and work. That community has really struggled to recover much in the latest economic improvement.

Looks like you found a nice zone of predictable undervalued stocks!

Swamp, thx. If you missed it, I shared a link to some more ramp up in windmill projects out toward Limon (this project is much bigger than any others I know of but don't think this stuff has gotten to building stage yet so doubt any concrete has been getting bid on yet, was personally thinking it might be more a 2017 or 2018 type thing- whoops just read whole article looks more like 2018-2019 thing so it's still out a ways).


http://www.bizjournals.com/denver/blog/earth_to_power/2016/05/xcel-to-build-1-billion-wind-power-project.html

All IMO only.

Great work Littlefish!!!

I put this over on yahoo board, figured I'd share it here as a ballpark way to value company if it were to be acquired in whole or part. Not at all expecting them to be acquired. Pretty sure the Gidwitzes have plenty of energy and involvement still with the businesses. But if they got to a market cap of $120 million, that would be over a 400 percent increase from here.

CUO CACS segment alone worth $60 million, whole CUO company possibly worth $120 million?
The company employs an investment bank firm mentioned in their 10Ks that used 3 quantitative tests to reach a valuation of the CACS segment:

"...For purposes of measuring the fair value of the CACS reporting unit the Company engages the services of an investment banking firm to assist management with the calculation. The fair value of this reporting unit is determined by applying three valuation methods. These are 1) discounted cash flow (“DCF”) valuation, 2) an analysis of comparable transactions within the industry and 3) comparable enterprise valuations of other public companies in the industry. The DCF valuation was calculated using a discount rate of 13%. The simple average of EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of select transactions in the construction materials industry in the last couple of years was used for method #2 and the simple average of EBITDA multiples of select publicly traded construction materials companies comparable to CACS was used for method #3. The simple average of the valuations under the three methods exceeded the carrying value on the Company’s books by over 89%."

So the three quantitative measures arrived at a simple avg price 89% above the carrying value of CACS segment on the books for CUO. I saw their segment assets carrying value on the books was almost $32 mill.

Putting an 89% premium to that gets us to a valuation of just over $60 million for CUO's CACS segment.
Considering all of CUO is valued at not even $30 million, it seems off that valuation we are buying shares of the entire company at less than half what CACS alone is worth.

Considering HVAC segment has been profitable for some time and has valuable assets as well including knowledgeable people, equipment, land and buildings among other things, one might say the HVAC segment is worth as much as CACS.

That could put valuation of whole company over $120 million potentially.

I could be wrong. All IMO only. Do your own DD. Less

Res side:

http://www.koaa.com/story/31371363/housing-market-off-to-great-start-in-2016

Thanks for the info.

A little bit of public sector help for construction in the coming years (err decades lol) for Pueblo area. The SDS was finalized and water began going to Colorado Springs I think earlier this month or April.

Fountain Creek needs a fair amount of flood prevention work including improved diking/levee systems so some aggregate, concrete needs. Probably pretty minor given the timeframe and likely not much work near term but better than nothing and helps demand side a little going fwd for Pueblo area IMO.

http://www.chieftain.com/special/water/4765557-120/million-projects-springs-chieftain

Wind farm projects, with higher concrete prices and their mobile batch plant, might be a potential area going forward:

http://www.chieftain.com/business/localbusiness/4753866-120/wind-project-energy-xcel

CUO

I brought some CUO the last couple of day around the $15 area. Normally I don't like to buy stocks this close to their highs, but I think this stock will make many news highs going foward.

1) GM were impressive last quarter, and sounds like GM if anything should stay the same or go higher.

2) Earning .31 in a seasonally weak quarter is impressive. I expect $2.25-2.50 for the fy and more the following year, pop a 10 pe on it, and I feel FV is around $25.

3) Not that I care about this as much as others, but tangible book value is over $25 while it is trading at $15.

Conclusion: I like stories, that offer, good growth, good balance sheets, improving Gross Margins, and cheap valuations. I think CUO at current prices is attractive in my opinion. All is just my opinion, and I could always be wrong though.

Best Q1 EPS this century :).

https://www.sec.gov/Archives/edgar/data/24104/000155837016006049/cuo-20160402x10q.htm


Much better days ahead with the ready mix pricing where it is, let alone the 2 new customers in pipeline for furnace sales and the fan coil business doing well IMO...

Still think the CACS segment alone is probably worth more than 200% of the entire company's current market cap.

And all IMO only of course...

Here's some info on fan coils, from Colton facility website :

"Williams now offers more fan coil sizes and configurations than any other HVAC company in all of the United States."

http://www.williamscomfortprod.com/about-us/since-1916/

This fan coil info is relevant to commercial building and especially lodging industry here in the US.

Here's a bit of info on hotels and their outlook-

http://www.hotelnewsresource.com/article84973.html

"Also in 2016, demand growth (+2.2%) is once again expected to be higher than supply growth (+1.4%). Demand growth in the U.S. has outpaced supply growth in each year dating back to 2010.”

Airbnb and others have definitely crimped hotel expansion/build rate to some degree the last several years but there's still a good foundation of increased demand and seems domestic demand has outpaced supply since 2010, quite possibly because of hotel chains being cautious with expansion given rising competition with the Airbnbs and vacation share rentals of the world.

So CUO's expansion of fan coil production line in 2016 makes sense to keep up with current demand and with potentially an outlook for hotels to start building more frequently to meet pent up increased demand in US markets (given demand has outpaced supply every year since 2010).

I'm not invested in CUO for the HVAC side of business all that much but figured I'd mention the fan coil side of biz since they're going to be expanding a little bit and Williams is the leader in size and configuration for fan coils domestically.

Currently, fan coils only do about $3+ mill revs per quarter (less than 10% of annual revs for CUO in 2015) but they aren't as seasonal as other lines so provide some revenue and earnings stability thruout the year for HVAC and also the $3 mill revs per Q number should rise once expansion finishes up as long as demand is there.

CUO also is pretty much made in the USA across the board with their domestically located facilities in all biz segments. :)

CUO trades about $10 per share under tangible book value too right now.

Hopefully that starts changing as people start realizing the turning point the company is finally going through and how far out that turn might lead.

All IMO only. Good luck all.

Figured might as well create a board for this company since there wasn't one.