# Bri-Chem Corporation (BRY.TO)



## JeffCourteau (Apr 9, 2015)

Hi guys,

Totally new to this site, some experience in trading, I try to apply the "buy low, sell high" scheme as much as possible, doing more swing trading than day trading. I usually search for non-toxic stocks in the "top losers" sections, doing as much research as I can about the company (I know a lot about financial statements, owning my company and having some accounting courses in my back pocket).

Here is my thought. We are in a pretty bad bear market for commodities, and oil takes a beating in Canada. Bri-Chem makes and blends drilling fluids and other stuff used when drilling or capping wells, be it in tar sands or shale gas wells. Even with the declining value (and canadian production) of oil in 2014, they managed to increase their profit, have no long term debt, good working capital, beautiful sales figures, and yet their stock tumbled on the TSX around 0.40$ this week. This has something to do with some so-called "analysts" who downgraded the share from "buy" to "hold".

Looking at their figures, I tend to see it as a "strong buy", could I be right? In the past 5 years, their share has been (for 4.5 years) worth well over 1.00$, even being over 1.50$ for more than 3 years. I think analysts try to steer people out of that stock, just to jump in at ridiculously low prices and make unbelievable profit.

Who's in?


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## millmillmillion (Apr 4, 2015)

JeffCourteau said:


> Hi guys,
> 
> Totally new to this site, some experience in trading, I try to apply the "buy low, sell high" scheme as much as possible, doing more swing trading than day trading. I usually search for non-toxic stocks in the "top losers" sections, doing as much research as I can about the company (I know a lot about financial statements, owning my company and having some accounting courses in my back pocket).
> 
> ...


I dont know why you believe they have a beautiful financial , its actually pretty ugly , they have a short term debt of 51 million and 18 million in account payable plus other. to keep it simple they have a short term debt of 69 million. for 12 months ending 2014 they had a revenue of 184 millions and cost of revenue of 152 million which gives it a gross profit of 31 million. ( im trying to keep the picture extremely rosy). 69 million in short term debt and the gross profit of 31 million in 12 months! you do the math! if it had been a long term debt it would have been better. how are they gonna pay for 69 million when even 2 years of gross profit wont cover it? are they gonna issue stocks? or file chapter 11 ?
also the trend has been down since 2012

I would stay away from this stock for investment , for a quick trade? I dont know , im not a trader.

plus the revenue has been falling ( 2011 revenue > 2012 and 2013 and 2014 ) . 
plus with the lower oil prices means lower oil production = less demand for their product.


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## GoLong (Feb 21, 2015)

^ negative fcf too since 2009, which is a big no-no in my books


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## JeffCourteau (Apr 9, 2015)

Mmmmm they have 105 million of current assets, and 75 million of current liabilities. Of those 105 million, they have 45 million of accounts receivable, enough to cover a good portion of their current liabilities. I know it's rough times for oil-related companies, but hey, isn't it in those times that you should buy stocks, when they're not doing very good? If I bought this share in the good years, I'd have lost a good part of it.

I think good times are ahead, and before this company files for bankrupcy, most of the TSX venture will be simply diluted.

For the length of the investment, I am in the short term. Like days to weeks. For this one, I would be ready to buy and stay there for a year, pretty sure I'd multiply my cash by 2 or 3...


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## GoLong (Feb 21, 2015)

What gives you so much belief in this company? They haven't had positive free cash flows in 4 years and have had to issue net debt of 25m in that time to simply pay the bills. '13 and '14 should have been great years given how profitable the oil industry was

Maybe it is due for a jump but I don't see where that jump will come from fundamentally

That 45m receivables won't come close to covering the ST debt so they'd have to borrow or raise equity to get that. Both of which will be negative for the company. 

Not trying to be mean, just my thoughts


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## JeffCourteau (Apr 9, 2015)

Well I was just asking for peoples thoughts. I am cherrypicking in the lows, so I should probably just continue looking for other stocks. However, I know I am taking more risks to make money in the short term, and I guess being in the oil bandwagon before the prices recover is a pretty good idea. I'll just continue looking for other opportunities and look for more advice in the coming days.

Thanks for sharing your thoughts guys!

Jeff Courteau


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## GoLong (Feb 21, 2015)

Ever looked at a company like Autocanada (ACQ)? I don't own it but it's had a big pullback as a result of oil, may be worth looking into


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## JeffCourteau (Apr 9, 2015)

Well, at 33.66$ per share (ACQ), maybe when I'll have a million to put in it could be worth it, but for the moment, I go more like 20K, so I shop for stocks below 1.00$, and have had good results with stocks around 0.50$...


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