I have been quite negative lately, so just to prove I am not a permabear, here is a stock pick that defines the word “speculative.” This pick is not for the faint of heart, but with those looking for some risk in your portfolio, this could be for you. Swinging for the fences like this is sexy and can carry huge risks as well as huge rewards, so obviously be cautious and only allocate risk capital to it if you want to buy it. Ok, enough with the disclaimer, let’s talk about Premier Exhibitions (PRXI).
Titanic Potential
According to Yahoo! Finance, the company develops and tours museum quality exhibitions worldwide. PRXI creates, designs, markets, and presents educational and entertaining exhibitions; sells apparel, posters, and Titanic-related jewelry; publishes exhibition catalogs; and provides ancillary services, such as audio tours and photographs.
While very few of you have heard of this stock, everybody has heard of its exhibition: The Titanic. It has exclusive legal rights to explore the Titanic wreckage site. This right alone is worth a lot of money in my opinion. A long court battle ended in the company’s favor, and it now owns 100% of several thousands of artifacts. Here is the ace in the whole and the main reason it has huge potential: the appraised value of the Titanic assets approaches $200 million. You might want to read this statement again, because it speaks volumes.
I can’t find an exact market cap on Yahoo! Finance, but the float is about 22 million shares and the price is $1.90, so you do the math. However, the enterprise value is listed and it is $81 million. This metric is equity plus debt minus cash and is what a company would pay to acquire it not including goodwill or a premium. So by all measures, the value of the Titanic artifacts dwarfs the current valuations for the company. That is a nice margin of safety to work with.
Going back to the risks, the company’s financial metrics such as operating margin, profit margin, return on equity, and return on assets are all negative, but that is expected since it is not currently profitable. Investors should look at its potential as a stock that is trading over 50% below the value of its assets. Another great thing is that its exhibition business does already generate meaningful revenues, but those should only go up over time.
The stock is currently trading at $1.90, but I wouldn’t be surprised to see it at $4-$5 in the next 12-18 months as more investors catch onto the story. As always do your own due diligence on the stock, but I wanted to change gears with my recent negativity and profile a potential homerun. Swing away!
Speculation Station: Speculative Stock That Could Pay Off Big is an article from: 
