Below is an exact copy of the original research report we published on November 15.

 

Our report, publlished November 15, 2016 recommended CETX as a huge growth opportunity.

In just 7 weeks, CETX had gained more than 100% for another fast double!

Our reports include profiles of the companies and management as well as the latest news. Our "Conclusion" section at the bottom summarizes why we like the stock.

 

 

 

 

Penny Stock Pick for November 15, 2016

 

 

Symbol: CETX

Cemtrex, Inc.

 

Company Location

Stock Information

19 Engineers Ln
Farmingdale, NY 11735
Phone: 631-756-9116

Current Price (Close on November 14, 2016): $4.09

Short Term Sell Target: $5.10 - $5.75

Long Term Sell Target: $6.75 - $7.50

Exchange: Nasdaq

Company Profile

Cemtrex, Inc., incorporated on April 27, 1998, is a diversified industrial and manufacturing company. CETX operates in a range of business segments and provides solutions to various manufacturing industries. CETX provides electronic manufacturing services of electronic system assemblies, instruments and emission monitors for industrial processes, and industrial air filtration and environmental control systems.

Electronics Manufacturing Services

CETX, through its Electronics Manufacturing Services group, provides end-to-end electronic manufacturing services, which include product design and sustaining engineering services, printed circuit board assembly and production, cabling and wire harnessing, systems integration, testing services and assembled electronic products. CETX's EMS group works with industries' original equipment manufacturers (OEM) in their outsourcing of non-core manufacturing services by forming a long-term relationship as an electronics-manufacturing partner. It is also engaged in designing, developing and manufacturing various interconnects and cable assemblies. CETX also provides engineering services, ranging from product introductions and prototyping, related testing equipment to product redesigns.

Environmental Products and Systems

CETX, through its Environmental Products and Systems group, sells air filtration and environmental control products to a range of industrial and manufacturing industries. The group also manufactures, sells and services monitoring instruments, software and systems for measurement of emissions of greenhouse gases, hazardous gases, particulate and other regulated pollutants used in emissions trading globally, as well as for industrial processes. CETX also markets monitoring and analysis equipment for gas and liquid measurement for various downstream oil and gas applications, as well as various industrial process applications.

CETX, under the Griffin Filters brand, provides an air filtration and environmental control equipment to industries, such as chemical, cement, steel, food, construction, mining and petrochemical. This equipment is used to remove dust, corrosive fumes, mists, hydrocarbons, volatile organic compounds, submicron particles and particulate from industrial exhausts and boilers; clean noxious and acid gases, such as sulfur dioxide, hydrogen chloride, hydrogen sulfide, chlorides, and organics from industrial exhaust stacks prior to discharging to the atmosphere, and control emissions of coal, dust, sawdust, phosphates, fly ash, cement, carbon black, soda ash and silica, among others from construction facilities, mining operations and dryer exhausts.

CETX, through its Monitoring Instruments and Products (MIP) group, manufactures and sells instruments for emissions monitoring, process analysis, and controls for industrial applications and compliance with environmental regulations. MIP emission monitoring systems are installed at the exhaust stacks of industrial facilities and are used to measure the outlet flue gas concentrations of a range of regulated air pollutants to determine the quality of the air. MIP's Laser Opacity monitor is used to determine opacity or dust concentration in stack gases. CETX also provides direct-extractive and dilution-extractive continuous emissions monitoring solutions (CEMS) equipment and systems for use with utilities, industrial boilers, flue-gas desulfurization (FGD) systems, Selective catalytic reduction-nitrogen oxide (SCR-NOx) control, furnaces, gas turbines, process heaters, incinerators in industries, such as chemicals, pulp and paper, steel, power, coal and petrochemical along with municipalities, state and federal governments. CETX's products are designed to operate to allow its users to determine their compliance with the governmental emissions regulations. CETX's MIP division also markets a range of crude oil and natural gas analyzers. These products provide real time measurement of various properties specific to the refining processes of oil and gas. CETX also provides replacement and spare parts, and repair and refurbishment services for various systems following the expiration of the warranties, which generally range for approximately 12 months.

               

Outlook for Fiscal Year

For the year, CETX anticipates that consolidated sales will be in the range of $93 million to $95 million and net income will be in the range of $4.8 million to $5.0 million.

“With FY 2016 revenue up at least 64% compared to the prior year and EBIDTA up approximately 74% compared to the similar period a year ago, we have delivered 571% sales growth and 1600% net income growth since fiscal 2013,” said Saagar Govil, Chairman & CEO. “During this period we have positioned CETX towards a diversified model which aims to capitalize on the continued global growth in highly advanced electronics manufacturing and the industrial equipment and services markets, thus providing increasing momentum for continued profitable growth in the coming years.”

CETX anticipates releasing its year-end results in late December and will provide an update and outlook for fiscal year 2017 at that time.

New Acquisition Starting

Two weeks ago, CETX announced that it has begun the moves to acquire an electronics manufacturing solutions company based in the Silicon Valley area. The electronics company is focused on electronic manufacturing services primarily for global leading semiconductor customers as well as OEMs in the medical, industrial, telecommunications industries. That company has averaged $7 million in annual revenues over the last two years. They also have an office in India to support the engineering & prototype development and operational activities.

This acquisition would be Cemtrex’s first foray into the US electronics manufacturing market and fulfills multiple strategic objectives for CETX. Cemtrex already has an established manufacturing base in Europe with two locations in the premium German market and one site in the low cost Romanian market. With this new acquisition, Cemtrex can offer its existing clients, who are typically global players, much needed manufacturing support and solutions in the US market. Additionally, the acquisition sets the stage for Cemtrex’s expansion into Asian markets down the road for manufacturing solutions with the new Indian location.

 

Cemtrex's VAMOX

CETX sees an opportunity to capitalize on a growing greenhouse gas reduction market and has kept the diversified company's Industrial Products & Services division squarely focused on the $47 billion air pollution control industry. Amongst other products and services for commercial and industrial applications, the IPS unit provides monitoring instruments for industrial processes and environmental compliance, and equipment for controlling particulates, hazardous pollutants, and greenhouse gases used in carbon trading globally.

In particular, a large market opportunity exists for Cemtrex's VAMOX methane abatement technology. Moving in lockstep with tightening regulations, the market could be catalyzed by leading countries working to implement cap and trade programs to reduce harmful emissions. As countries like China, who has long been criticized for being unreceptive to changing emissions regulations, turn to cap and trade, it's probable that other countries, the U.S. not withstanding, will follow. With VAMOX, Cemtrex boasts being one of only two companies in the world with carbon-capture technology succinctly aligned with cap and trade programs and the Paris agreement.

CETX's VAMOX system has a pricetag of about $2 million each.

For the future, CETX is looking beyond monitoring and reducing greenhouse gases to strengthen its foothold in the sector. Late in July, CETX disclosed a new initiative to set up a research pilot plant for the production of graphene by isolating carbon dioxide from flue gases at its Farmingdale, NY facility.

 

Management

Saagar Govil
Chief Executive Officer, President, Chairman

Mr. Saagar Govil is Chairman of the Board, President, Chief Executive Officer of CETX. He is CETX's Chairman, since June 2014, and the Chief Executive Officer, and President since Dec. 2011. He has been working at Cemtrex since 2008, initially as a field engineer, subsequently moving into sales and management roles as Vice President of Operations. Mr. Govil was recently recognized as a Forbes' 30 Under 30 in 2016, Business Insiders #17 on Top 100 of Silicon Alley in 2015, and Top 40 Under 40 by Stony Brook University in 2014. Mr. Govil has a B.E. in Materials Engineering from Stony Brook University, N.Y. Mr. Govil is the son of Arun Govil.

 

Renato Dela Rama
Chief Financial Officer

Mr. Renato Dela Rama is Chief Financial Officer, Vice President - Finance, Secretary of CETX. He has been Chief Financial Officer since December 2004. Mr. Dela Rama also works as an accountant for Ducon Technologies Inc. since 2004. Prior to that, he worked in various accounting and financial management positions. Mr. Dela Rama holds a B.S. degree in accounting.

 

One-Year Chart

 

Conclusion

CETX is beginning to come into its own as a diversified company. It is finally reaching a point where it is big enough to to provide what its customers need and want, but still small enough that there is room for huge growth in the company and the stock.

Year-Over-Year, revenue growth hit 67%. We feel that the rate of growth will be a bit slower, but the growth in the net income numbers will accelerate.

The CEO is a young guy, but has won numerous awards and accolades. He also has his father to help who is an executive at CETX who had been much of a mentor before giving up the reigns. He still plays a role and is the even keel for CETX that helps keep the company stable while his son desires huge growth.

We believe that huge growth numbers will continue and net income numbers will accelerate over the next few quarters. With CETX having less than 10 million shares outstanding, moves higher could come quickly when good news comes forth.

We believe CETX has the potential to rise 25-50% over the next 1-2 months and as much as 75-85% over the next 3-6 months.