The Razor's Edge

2-Year Price History

A Word Of Caution

Stocks trading for less than $1 are loosely termed "penny" stocks. Allied Resources, Incorporated (ALOD) is selling for less than $1 per share. While, we stand by our ratings methodology for long term value investors, often times "penny" stocks will be more volatile. Because many "penny" stocks are lightly traded their stock price can fluctuate because of a single large trade. Also, there is generally less analyst coverage of such "penny" stocks and thus less information from which to base our rating.

Therefore, (and as always), check additional sources and available information regarding Allied Resources, Inc. before making an investment decision.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

ALOD Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at ALOD through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 5 years are 4.80x and 1.50x respectively.

Utilizing this range we can see that ALOD’s current Price to Sales per share ratio of 1.30x is significantly below its average levels historically. In fact, with a current price of $0.30, ALOD is a full 59% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for ALOD.

ALOD Cash Earnings

Looking at ALOD specifically in their Cash Earnings capabilities, Ockham views ALOD as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 5 years of cash earnings levels for ALOD to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 13.37 and a 4.04 low over the same period.

Now that ALOD’s current price is $0.30 and its Price to Cash Earnings ratio is 3.33, we are very positive on its outlook from the cash earnings perspective. In fact, ALOD is now trading a full 62% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why ALOD has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

ALOD Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. We regard ALOD as neutral in terms of dividends because they have no history of paying a dividend and continue to reinvest that money for growth purposes.