NEW YORK and VANCOUVER, British Columbia, Jan. 7, 2004 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate.
Analyst Brian Tang, CFA, of Investrend affiliate Fundamental Research Corp. has initiated coverage of Bevo Agro (TSX Venture Exchange:BVO) with a "Buy" rating and has assigned the company a Fair Value of C$0.95.
The analyst, Brian Tang, CFA, notes in his 13-page report, available free at www.fundamentalresearchcorp.com or www.investrend.com, that the company is in a "unique industry position as the only pure plant propagator in North America."
Tang said, "strong fundamentals continue to drive vegetable consumption in North America..." which should drive demand for Bevo's plants. One of the factors the analyst believes will continue to drive demand for vegetables is the trend towards healthier living reflected in practices such as the Atkins Diet. According to the analyst, the per capita vegetable consumption in the United States has increased from 360 pounds in 1971 to 437 pounds by 2002. Similarly, tomato production in Canada has grown at a compound average growth rate of 11% from 3.5 millions pounds in 1951 to 480 million by 2002.
Tang's fair value on the stock is C$0.95, derived from comparing the EBITDA multiple of the recent Hot House (TSX Venture Exchange:VEG.U) income trust IPO to Bevo's current multiples. This implies an expected return of over 60% from the company's most recent closing price of C$0.60. The analyst notes that Bevo is "...undervalued based on Hot House comparable EBITDA multiples and market P/E's." The company trades at only 5.59 times EBITDA versus 6.77 times for Hot House. Tang thinks that Bevo "...offers good growth potential at very attractive valuation levels for investors." Bevo trades at a P/E of just 6.7 times versus 37.49 and 19.20 for the TSX/S&P Small Cap and Market Composite respectively.
Please read the important disclosures and disclaimers at the back of the report available free at www.fundamentalresearchcorp.com. Fundamental's standard fee for coverage is $25,000, and Bevo Agra has paid Fundamental's fee. Fundamental Research Corp is an independent equity research firm dedicated to providing institutional-quality, fundamental research on smaller-cap and under-followed companies. Their investment philosophy is value-based.
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