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TimelessWealth.net: Alpha Pro Tech (APT): A Vital Building-block in biotech and pharmaceutical industry.
Alpha Pro Tech (AMEX: APT) develops, manufactures, and markets disposable protective apparel products, building supply products, and infection control products in the United States and abroad. Source
Business Necessity
When H1N1 (Swine Flu) fears arose, Alpha Pro Tech experienced an increasing demand for their line of face masks and other infection control products. As global fears of the recent pandemic ease, history shows that another will inevitably follow. While at times we would like to ignore these cruel thoughts, the reality of any such pandemic arising is that Alpha Pro Tech's line of infection control products will again experience a spike in demand.
Alpha Pro Tech distributes a necessity to the biotechnology and pharmaceutical industries through their Protective Apparel line. Whether investors realize it or not, a great deal of research and development takes place prior to a novel drug or product being submitted to the Federal Drug Administration (FDA) for 'approval'. Collectively, long years of trials comprise a great expenditure in protective apparel such as shoe covers, coveralls, bouffant caps, gowns, frocks and lab coats. In other words, the multi-billion dollar biotech and pharmaceutical industries rely upon manufacturers of protective apparel products, presently, Alpha Pro Tech Limited.
Valuation Analysis
Trading at a 5.7X trailing earnings multiple and price to sales ratio of just 0.82, Alpha Pro Tech is a compelling value play. Add 67% year-over-year sales growth and an impressive 1099% jump in earnings for the fourth quarter 2009, compared to the same period in 2008. When asked to comment on one or more elements that distinguish the company from competitors, Alpha Pro Tech IR, Donna Millar, listed turnaround time and efficiency, ability in fulfilling 'custom' orders, and responsiveness to the needs and demands of end users (consumers).
Timing
Trading at a 71% discount to its 52-week high ($7.60), shares of Alpha Pro Tech have retraced to an April 2009 supporting level (ref. weekly chart below) in an oversold market. These characteristics are typical to markets just prior to a 'bounce' or recovery in price.
Unique Aspects
Accompanying the company's annual and fourth quarter 2009 financial results announcement, Alpha Pro Tech's Board of Directors authorized an additional $2.0 million of stock repurchases under their stock repurchase program.
"During the year ended December 31, 2009, we repurchased 1,554,900 shares of common stock at a cost of $2.1 million. As of December 31, 2009, we had repurchased a total of 6,193,800 shares of common stock at a cost of $7.7 million through our repurchase program.[...] We retire all shares of stock that are repurchased." Source
The Company boasted a 33.7% increase in working capital to $29M in 2009, as well as "an unused $3.5 million credit facility". While Alpha Pro Tech reserves $9.75M cash on hand, the company has no outstanding debt.
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