In my weekly premium newsletter -- Undiscovered Micro-Cap Gems -- my goal is to introduce readers to a variety of promising micro-cap investing ideas that they may wish to consider for their portfolios. In doing so, I generally look for small, neglected companies that have been overlooked by conventional Wall Street sources. I also look for undervalued firms that are trading at a steep discount to their intrinsic value. Many of these individual investment ideas have the potential to deliver triple-digit percentage gains in the years ahead.

Below you'll find an in-depth look at one such investing idea that I introduced my readers to last weekend. Because I first sent this article to my paid subscribers last weekend, please note that all prices listed in this article are as of the close of trading on Friday, June 17th.  Please also note that after I introduced this quality company to my readers several days ago, the stock has rallied sharply higher.

To gain access to dozens of similar investing ideas each and every week, you'll need to subscribe to my Undiscovered Micro-Cap Gems service. In the meantime, I sincerely hope you enjoy today's sneak peak at one of my most recent micro-cap investing ideas...

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American International Industries (AMIN.OB, $5.70)
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American International is a holding company that operates a number of wholly- and partially-owned business entities. The company has subsidiaries in the oil & gas, real estate, and manufacturing industries. These include a 51% stake in Delta Seaboard Well Service, a rig-based well servicing contractor that provides services to the oil & gas industry, as well as full ownership of Brenham Oil & Gas, a firm with substantial royalty interests.

The company also has a majority stake in International American Technologies, a distributor of polyurethane chemicals and spray-on lining for pickup truck beds, as well as full ownership of Northeastern Plastics, a supplier of automotive products and consumer durables.

The company's focus is on identifying profitable business opportunities in various industries and then assisting in the growth and development of these acquired companies. The firm is able to increase shareholder value whenever it manages to improve upon the results of the firms it has purchased. In many cases the company then sells these businesses in an effort to lock in substantial gains.

This stock initially caught my attention when I noticed a press release that stated AMIN.OB owned waterfront property at an asking price of $16.3 million. With a total market cap of only $16 million, I felt the stock was worth exploring further. Here's what I found:

In April, the company announced plans to sell 287 acres of waterfront property near Galveston, Texas for a list price of $16,330,000. On the balance sheet, this property is recorded at its historical cost of just $225,000. The listing broker has informed AMIN.OB that several potential purchasers have expressed interested. The land is suitable for high-end development uses, such as hotels, shopping centers and other commercial and residential projects. Clearly, this asset provides a significant margin of safety for investors in this company.

Last quarter, American International posted revenues of $4.1 million, a sharp +43% increase from the amount reported in last year's first quarter. Nearly all of the firm's revenue growth was attributable to two subsidiaries: Delta, which posted a +30.8% increase in revenue to $2.77 million, and Northeastern Plastics, which reported revenues of $1.35 million, representing an +81.5% year-over-year gain.

A significant -30.9% drop in SG&A expenses further enhanced these impressive gains. However, even though operating income surged from a loss of -$193,000 to a profit of $321,000, the company still posted a $1.76 million net loss for the quarter. The weak bottom-line figure was the result of a $3 million unrealized capital loss in one of the company's holdings -- Orion Healthcare (ONH). The value of the company's 875,000 common shares (which were converted from preferred shares) has dropped precipitously and was marked down, but management expressed confidence that it will eventually recoup its investment here.

For a company with an adjusted enterprise value of only around $10 million (Market cap of $16.7 million + total liabilities of $6.9 million – cash of $8.9 million – short-term investments of $0.3 million - long-term investments of $4.3 million = $10.1 million) American International has attractive assets and solid growth prospects. Assuming the firm's long-term investments are fairly liquid, it appears that this micro-cap is now selling well below its break-up value. In addition, the company's underlying portfolio of businesses looks healthy and has promising growth potential. With this in mind, although I would recommend more in-depth research on this company, a small-position may be warranted for those with a long-term investment horizon.

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Important Note: The above article was merely a small excerpt from a recent issue we sent to subscribers of our premium value investing service -- Margin-of-Safety Investing. In each issue of that newsletter, editors Nathan Slaughter and Paul Tracy deliver an in-depth look at a variety of other deeply discounted stocks that should provide investors with a solid margin of safety at current prices. To receive your copy of our most recent issue of Margin-of-Safety Investing, as well as other guidance similar to this twice per month, you'll need to subscribe to this publication. To learn more, please visit:
https://www.streetauthority.com/subscribe-msi.asp

Thanks for reading!

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