When I think of penny stocks I tend to assume the company’s are risky start-up or early stage ventures not businesses with a solid history of growth and earnings.  AKRK is an established business that has grown organically and is seeking the capital through a secondary offering that will allow management to complete the acquisition of additional cork forest acreage and factory and other fixed assets needed to increase production capacity.  The acquisitions are all under contract management just needs to capital to close the deals.  The transactions will facilitate accelerated growth. 

The following table reflects actual operating data for the two years ended Dec. 31, 2007 and 2008 and my estimate for 2009.  Note that operating results in QIV 2008 and QI 2009 were below trend due to the sharp contraction in worldwide economic activity that took place during that period.  The Company’s operating results showed sharp improvement in QII and QIII 2009.  My QIV 2009 estimate is only 20% more than Asia Cork generated in Q IV 2007 so I think it is reasonable.

If my 2009 estimate is in line with actual results AKRK is selling at less than 7x eps.  Given the Company’s solid business model and management’s plans to grow the business it is hard to imagine this stock staying under $1 for much longer.  I believe patience will pay off with Asia Cork and longer term investors will do very well.