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The Company is engaged in the business of developing, manufacturing, marketing and distributing generic and private-label pharmaceuticals to the wholesalers, distributors, warehousing and non-warehousing chain drugstores and managed care providers.
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Gtrinvestor (99.99) Submitted: 7/18/07 4:03 PM : Start Price: $16.10 CPD Score: 12.85
Caraco Pharmaceutical Laboratories, Ltd. develops, manufactures, and markets generic, prescription, and over-the-counter pharmaceuticals in the United States and Puerto Rico. The company's revenues and cash from operations have grown consistently for the past 3 years. Contrary to TMF CAPS board, Yahoo shows the PE of the stock @ about 22 (confirmed with MSN and Google, so more likely correct), which does not appear too high given the fast growth on this one. However, their EPS is a little inflated, in that they didn't record any income tax expense in '07 (presumably due to the utilization of prior operating losses). This will probably be true for a year or two depending upon the size of these historical losses (with Retained Losses @ only $38 MM, and pre-tax earnings of $27 MM in '07, I assume only one more year).Company has no debt on the books, $34 MM in cash and a market cap of only $450 MM, which leaves plenty of room for growth... or more importantly, a buy-out. I also love that, even though the company's stock has had a bit of a run up in the past several years, there really isn't a significant amount of insider selling going on. I know that I have said on my outperform ratings that I think the bigger players in this business will be the ones to make real money; however, these guys are doing it on a smaller scale somehow, which surprises me. However, what I think will really happen is a buy-out in the next year if Caraco continues to perform this well.
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Gtrinvestor (99.99) Submitted: 7/20/07 10:27 AM
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Under full public disclosure, after further research, I put real money into this one yesterday and a little more in today. Further research includes finding that 5% and insiders own a whopping 78% of the company. In addition, of the Major Direct Holders filing Forms 3 & 4 per the Yahoo website, you can see that most of these investments have been made w/in the past 12 months. Of those, Sun Pharmaceutical Industries Ltd. purchase 2.2 MM shares in the past 4-5 months. So while they all may have a decently lower basis in the company than I will, I still like the recent purchasing activity telling me that some people have recent faith in the company's prospects, and didn't sell out ofter a quick 30-40% gain. On top of the fact that I think the broader US economy is probably going to head for a slow-down in the coming months, I like to have investments like these which are less elastic to the world economy. Actually, given less amounts of cash, people may be more likely to switch to generic drugs in place of pricier brand names.
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Gtrinvestor (99.99) Submitted: 8/17/07 12:40 PM
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As a caveat to those trading in this stock, watch out, it is very very thinly traded. For instance, there is someone out there who has a standing sell order for fully $2 above the market price hoping to snag an unsuspecting "market price" buyer. Play it safe and use limit orders.
Gtrinvestor (99.99) Submitted: 10/24/07 4:47 PM
Well, another quarter down, another increase in EPS by 100%, and other quarter of trading @ an approx. 20ish P/E. Sound a little undervalued to you? Me too, that is why am personally invested in this company who's stock is followed by exactly no one.
Gtrinvestor (99.99) Submitted: 11/05/07 5:55 PM
Well, a little more investigative work, and frankly me reading the WSJ, shows that this company is a front for the Indian pharma company called SunPharma (thus the "insider purchases by them). From what I have read, SunPharma is the largest pharmaceutical company in India. In essence, SunPharma invents drugs, and "sells" them to CPD in return for stock. I actually like this arrangement, b/c I believe that the drugs actually have to be approved by the FDA before CPD has to take them. CPD also has other routes to do R&D, but this is a great way to get them up and running, especially in the nascent stages of competing against the big boys, when smaller companies are strapped for cash.
Gtrinvestor (99.99) Submitted: 1/29/08 8:20 PM
Here is a great, but lengthy, article on CPD. I still hold this one in my personal portfolio, and plan on doing so for quite a while.http://seekingalpha.com/article/61962-caraco-pharmaceutical-laboratories-fast-grower?source=side_bar_long_ideas
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