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June 28, 2006 Stock Pick: North American Galvanizing & Coatings (NGA)

Stock Price: $4.50

North American Galvanizing is a leading provider of hot-dip galvanizing and coatings for corrosion protection of fabricated steel products. The company conducts its operations through a network of plants located in Ohio, Kansas, Texas, Missouri, Colorado, Oklahoma, Tennessee and Kentucky.

NGA reported revenue of $15.4 million for the first quarter, up 66% from the same period last year. Net income came in at $982,000, an improvement of over 900%. NGA is significantly undervalued at a market cap of only $30.86 million and a price to sales ratio of 0.57. NGA deserves to double from its current price to be more in line with industry valuations.

NGA is trading at only 1.5 times book value. NGA traded to a high of $6.60 within seven trading days of their first quarter report. It appears that more eyes are on NGA than ever. NGA has been turning the corner. With only 3.69 million shares in the float, we expect it to move quickly especially with the momentum behind it.

The company was quiet until the Q1 report. We believe NGA is coming out of its shell. Q2 will be out within the next month.

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