Featured Penny Stock : SGNJ - Storage Innovation Technologies, Inc.

In the News :
OTC: SGNJ - Storage Innovation Technologies, Inc. - Strong Buy Recommendation
The Next New BIG THING has arrived.
A BIG thing is something that is clearly perfect for the times. Typically it's something, once exposed to the general public, makes us go 'why didn't I think of that?' The biggest things are usually clear evolutions of previous 'big things.' It takes a proven idea and makes it more than just better - makes it just right for the times.
Storage Innovations Technologies (OTC: SGNJ) is a perfect example of just such a BIG THING. The industry from which SGNJ evolves is actually a combination of the property storage and personal security categories.
One doesn't have to sit on the Homeland Security Council to know that Americans are more concerned than ever with the protection of their personal property, prized possessions and most prized possession of all - the lives of themselves and their families.
The 'big thing' that Storage Innovations Technologies has to offer is the most secure personal property storage facilities to ever be constructed in America as well as underground shelters and panic rooms for Americans and their families.
The first SGNJ unit is scheduled for construction during the 4th Quarter of 2004. On that day the ground rules for this $200 million industry - which has experience very little in the way of innovation since inception will change forever.
For investors this means getting in on the ground floor that actually begins below ground with underground shelters to protect families and loved ones. Panic rooms to protect against what is quickly becoming the 'more expected, unexpected.'
As you study the facts, figures and other data provided in this document keep in mind that the competition to the SGNJ model will pale in comparison. Those with valuables worthy of truly secure protection as well as storage will compare SGNJ technology, security and commitment to protection to a tin Quonset hut with a padlock.
The next 'Big Thing' has arrived and it clearly promises to get bigger.
STORAGE INNOVATIONS TECHNOLOGIES
- Market Data on SGNJ Common Stock
- Overview
- Summary & Investment Conclusion
- Recommendation to Individual Investors
- Business & Industry Environment
- Genesis of Storage Innovation & Strategy
- Management Team
MARKET DATA ON SGNJ COMMON STOCK
Recent Stock Price: | $2.00 | 12 months Target Price: $4.00 |
12-Week Low: | $0.60 | Shares Outstanding: 21 million |
12-Week High: | $2.00 | |
Market Value: | $18.9 million |
PROJECTED OPERATING RESULTS 2005 - 2008 | ||||||
Gross | Earnings | Stock Prices-Target Ranges | ||||
Sales | Profit | per Share | @ 6x Sales | @ 16x EPS | ||
(mln) | Amt (mln) |
Mgn | ||||
2005(e) | $ 8.0 | $ 4.0 | 50% | $0.08 | $ 2.28 | $ 1.28 |
2006(e) | $21.0 | $13.7 | 65% | $0.35 | $ 6.00 | $ 5.60 |
2007(e) | $39.0 | $27.9 | 72% | $0.80 | $11.14 | $12.80 |
2008(e) | $62.0 | $46.0 | 74% | $1.40 | $17.71 | $22.40 |
TARGET STOCK PRICES --Next 18 Months | ||
Q-4, 2004 | First Half, 2005 | Second Half, 2005 |
$2.50 / share | $4.00 / share | $6.00 /share |
OVERVIEW
STORAGE INNOVATIONS TECHNOLOGIES: Two major developments in the USA political economy during SGNJ's debut as a public company ultimately influence its corporate valuation: (i) The Report of the 9-11 Commission; and (ii) Microsoft's New Dividend Policy.
The message to Individual Investors in each of these recent developments is: Be prepared to look at established norms differently in the decades ahead --- the 9-11 Report's message (to embrace change) is about national security, while the Microsoft message tells investors its best use of cash is to pay dividends, rather than spend it to commercialize new technologies.
To quote Barron's "Microsoft's dividend bonanza confirms what has become more and more apparent for the past few years--- that the next big new thing has yet to arrive. And when it does, it likely won't much resemble the last big new thing." (July 26, 2004 edition)
SGNJ is commercializing a space that in effect straddles both of these developments by first, elevating the industry's standards of providing personal security and self-storage services, and second, applying new technologies to an industry, self-storage, that arguably hasn't changed in 100 years.
SUMMARY & INVESTMENT CONCLUSION
It is impossible to foretell if a company like Storage Innovations Technologies is destined to become a part of "the next big, new thing" to paraphrase Barron's. No one can make such a forecast.
With the publication of the 9-11 Commission's Report and Microsoft's stock buy-back and dividend pay-out to shareholders (estimated at $75 Billion over four years), only the most unimaginative investors will think it is business as usual. It isn't.
In scouring the investment landscape for small cap public companies that might be poised to financially participate in this changing economic climate, Storage Innovations appears to meet most of the criteria --- namely: Applying now-Available State-of-the-Art technologies to a highly fragmented industry that is nationwide in scope.
Self-Storage Pre-SGNJ:
There are over 40,000 self-storage facilities in the USA. The two largest public companies in this industry, Public Storage (PSA) and Shurgard Storage Centers (SHU) together account for about 1,200 units, or 3% of the industry. This means over 38,000 are independently owned, all of which represent potential acquisition candidates for SGNJ.
Self-Storage Post-SGNJ:
SGNJ's Model of Projected Operating Results is based on (i) opening six new State-of-the-Art self-storage facilities per year; (ii) acquiring up to another 100 facilities over the next three years; (iii) upgrading acquired facilities to SGNJ's higher standards, going beyond basic self-storage services to provide add-on features including personal security, safe storage of valuables and panic rooms.
The Anatomy of an Earnings Per Share Model is appended to the end of this report. (An alternative presentation of returns to shareholders is presented in the event SGNJ elects to be taxed as a REIT.) This Anatomy provides the operating data used to produce the Revenues and Earnings projected at the start of this report. Here is the summary of those forecasts ~
Revenues increase from $8 million to $62 million
AVERAGE ANNUAL REVENUE GROWTH, 2005-2008: 100%
Earnings per share increase from $0.08 to $1.40
AVERAGE ANNUAL EPS GROWTH, 2005 - 2008: 150%
Conclusion: SGNJ is a MUST-OWN stock for any small cap investor. Although it is a newly-arrived public company in an industry that hasn't witnessed any noticeable changes in 100 years, the next 12 months are likely to provide investors with the most robust gains in stock price --- as so few people know about this story, at the moment.
For example, the appreciation in stock price from 90 cents currently to $3 / share in the first half of 2005 is a greater rate of gain (a tripling in value) than the increase from $3 / share to $6 / share (doubling) in the 12 months after that. Think about this statistical fact when hunting for above-average investment returns.
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RECOMMENDATION TO INDIVIDUAL INVESTORS
We have two levels of recommendations for Individual Investors --- FOR MODEST INVESTORS ($5,000 PER POSITION), purchase up to 5,000 shares of SGNJ over the next week. Average up if you have to, but accumulate 5,000 shares by early August.
At the first target price tranche of $3/share, commit another $3,000 by purchasing 1,000 more shares. This will give the investor a total of 6,000 shares at a cost-basis of $1.33 per share (for $8,000). Value of this position in Second Half of 2005: $36,000. Gain: 4.5 times.
FOR AGGRESSIVE INVESTORS ($25,000) --- accumulate up to 20,000 shares over the next two weeks, via purchases in 2,000 to 3,000 share blocks. Ride this position until the second half of 2005 (projected value of this position: $120,000) Gain: 4.8 times.
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BUSINESS & INDUSTRY ENVIRONMENT
Storage Innovations Technologies is in the business of owning & operating state-of-the-art public self-storage facilities. Facilities will include basic conventional self-storage units, climate control self- storage units and self-administered vault / safe-keeping services. Each facility will also rent safe rooms and disaster-relief rooms in case of a natural catastrophe or terrorist event.
The self-storage industry is one of the most highly fragmented in existence. There are only two other public companies in this commercial space
- Public Storage (PSA), Seattle, Washington; Owner/Operator of 591 self-storage facilities; Market Value of $6.2 Billion; Annual Sales of $891 million (7 times sales), and
- Shurgard Storage Centers (SHU), California; Owner/Operator of 617 self-storage facilities; Market Value of $1.8 Billion; Annual Sales of $302 million (6 times sales)
The combined 1,208 self-storage facilities of these two companies represent only 3% of the estimated 40,000 self-storage facilities in the country. This means that there are literally thousands of individual commercial entities that own over 38,000 self-storage facilities nationwide.
Given the nature in which this industry finances its operations...many of these entities own no more than one or two facilities (i.e. via tax shelters, or limited partnerships), a financing mechanism that has compounded dispersed ownership of the industry.
It is this dispersion of ownership interests among many individual entities that presents this investment opportunity for SGNJ to consolidate the industry.
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GENESIS OF STORAGE INNOVATION & STRATEGY
The self-storage industry has not changed in 100 years. At the same time, demand for self-storage services remains undiminished and has even increased.
The Company's Mission Statement is to provide State-of-the-Art technological innovations to the self-storage industry, to build a commercial presence of State-of-the-Art self-storage facilities nationwide and to acquire individually owned self-storage facilities.
Stated Corporate Objective for 2008---to own/operate more than 100 facilities.
TARGET STOCK PRICES --Next 18 Months | ||
Q-4, 2004 | First Half, 2005 | Second Half, 2005 |
$2.50 / share | $4.00 / share | $6.00 /share |
It's possible our target prices will change as the company implements its business plan, and as Revenues and Earnings unfold in the quarters ahead. This plan includes building 3-6 State-of-the-Art self-storage facilities per year in-house and acquiring another 10-20 facilities annually. This generates Sales by 2006 of $21 million.
By the second half of 2005, the market will already be looking to expected operating results for 2006. Using the industry's standard valuation of six time sales yields a market valuation potential of $126 million, or $6/share.
SGNJ's intention is to utilize all three of the financing mechanisms that typify this industry --- each one of which can be a compelling investment for individual investors
- Investing in Storage Innovations Technologies common stock;
- Investing directly in one of the Company's newly built facilities;
- Investing in one of the Company's special purpose partnerships (each special purpose partnership will raise $3 million for construction)
MANAGEMENT TEAM
Don Oehmke is the Chairman (and co-founder) of Storage Innovations Technologies. Previously, Mr. Oehmke was the Chairman & CEO of Ventana Consultants (1991-2004), a business consulting and venture capital firm. As its CEO, Mr. Oehmke operated at the highest organizational levels, for both domestic and international companies.
From 1985 to 1990, he was Chairman & CEO of Boucher, Oehmke $ Company, a securities broker / dealer with 26 offices in the USA and 5 in Europe. Mr. Oehmke has held numerous other positions professionally that provide him with practical operating knowledge of business in general and consumer needs in particular. These include Board Memberships in North Star Productions Corp and WestMed Inc, CEO of Sports Distributing and President of Yuma Medical Supply.
Andrew Alspach is CEO & President (and co-founder) of the Company. In addition to responsibilities for day-to-day operations, Mr. Alspach also oversees strategic planning, including new facilities and acquisitions. He has accumulated 20 years of progressively increasing responsibilities in construction and property management, and over the past five years, personal / property security for high-visible individuals.
Most recently (1997-2004), Mr. Alspach has held the position of President, AZ Property Services, a commercial property and estate management company. Prior to this, Mr. Alspach was CEO and President of Honu Woodworks, a commercial and residential property developer, and before that, Operations Manager for ChemMark Corp, a position that included delivering technical-based solutions to general business issues.
The combination of Mr. Oehmke's financial services/ invest- ment banking expertise and Mr. Alspach's hands-on property & security / safety experiences is a compelling team for a Company in an industry that, at present, has no road map to the next state of its commercial expression.
DISCLAIMER
View the Storage Innovation Technologies Disclaimer»
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