Newsletter
OTCJ: Force Protection and Derycz: Two Oppsite Opportunities to Make
| Home Page : www.otcjournal.com
Email Questions or Comments To: [email protected] To
OTC Journal Members:
The Chinese economy delivered blockbuster GDP numbers this past week- more in Monday's edition. The Chinese economy has the best global GDP growth to be found right now. They are blowing away the rest of the world, and their growth is no longer export driven.
I'm on record with a number of China ideas ranging from the largest ETF to a small media company. In all- 5 ideas total. I'm 3 for 5 right now- 3 are winners, and 2 not so good yet. FXI, UTA, and NFES are all up nicely; CGYV has been problematic mostly due to timing, and LEGE was a rocket of the gates, but in short order completed a round trip and then some. I have two more China ideas for you, and they are on the opposite ends of the spectrum. One does $100 million in annual revs, and is reinventing itself and getting focused. The other is a zero revenue company, but owns of the most interesting and possibly valuable assets I've ever studied. Sometime in the next week I'm going to introduce the $100 million idea- it's on NASDAQ. Stand by. Today's edition contains two new
trading ideas - one a lot of investors have followed, the other no one
has ever followed. The first was covered by our sister newsletter property.
The SmallCapNetwork,
covered this stock from $2 to $25, and a lot of investors
have followed it over the last 3 years. The second idea is a company that
is growing, profitable, and no one knows about it. I think you can make
money on either or both. Read on.....
April 3rd- 2004- that's the first time I wrote about FRPT- it was a $.25 stock at the time- that's right- a mere quarter. The reverse split adjusted price would have been $2.50. Of course, we were bashed when the stock traded to $.81 in January of 2006. To make a long story short, right idea, but wrong timing. We're often in too early on these sorts of ideas.
In May of 2007 the stock traded to $31. Wow. That's right- $.81 to $31 in 15 months- quite a run. This defense contractor that makes all sorts of proprietary hardware for protecting military vehicles then ran into some headwinds. Accounting scandal, rumored SEC investigations, and the raging bear market sent this stock on a round trip. $31 in May of '07 to $1.25 this past March. Quite a chart. However, all this supposed scandal and investigation kind of fizzled into nothing, and the stock turned around and started getting very healthy again- until June 30 when the company failed to land a big contract that was rumored to come their way. They lost the contract to competitor Oshkosh Corp, and it was a $1.06 billion Army deal. The stock got hammered. In my view, the market is often emotional in the short term, and often over reacts to events. This was an over reaction in typical stock market fashion. A very smart analyst I know believes the company will earn at least $.33 EPS this year. He also believes Oshkosh will sub out a significant portion of the contract to FRPT. He tells me they have to- they don't have the required technology. Since the huge gap down, the stock
has since made a bottom and started a recovery phase. If it breaks above
that gap down to $6, watch it run back to $10 as all the non believers
have sold out, and bargain hunters come back on. Friday's closing price
of $5.20 seems like a great entry level to me- don't load
up on margin- my SSL is $4.50- that would be a new low. Upside
this year- $10.
I invested $50,000 of my Defined Benefit Plan money in Deryczx Scientific about 2 years ago. I paid $1 per share, so I own 50,000 shares at $1 per share. At the time, the company was not public. There's your disclosure. Earlier this year I looked at their year end 10k and told myself I should hold onto this one. This past week, I looked at the March quarterly numbers, and thought to myself I should be a buyer as the company delivered its first profitable quarter. DYSC is in the information services business. DYSC is an aggregator and manager of "published knowledge" on behalf of huge companies. Here's what this means in English. They provide the service of finding, identifying, managing, and legally using anything that is published on anything. Their service is widely used by Pharma and Biotech. For example, if some 3rd party writes a favorable review on Lipitor, Pfizer wants all their salesmen to put this 411 in the hands of every doctor they can. There's one problem- the "published knowledge" is copy righted, so Pfizer can't legally reprint it. Their largest customers include the likes of Abbot Labs (NYSE: ABT), and Biogen (NASDAQ: BIIB).
DYSC makes a licensing deal with the publishers and prepares the content on behalf of the client. They charge a fee for this service, and it's paying off. Last quarter, DYSC enjoyed $3.8 million in revenues and their first net profit - it was $120k, and equated to $.01 EPS. The company has been averaging about 10% growth every quarter, and the trend is likely to continue. The stock is very thinly traded, and followed by no one. There's only 13 million shares I&O, so the market value of the whole company at $1 is $13 million. $3.8 million in quarterly revenues (assuming 10% continued growth) is $17.6 million in revenues over the next four quarters. The company has no debt and about $5 million in cash and cash equivlents against $2 million in payables. Their cash position has improved over the last few quarters. This one is a hidden gem. It's pretty illiquid, so traders should stay away. However, I think this is a lay down for a double once the stock gets a little more recognition. I'm the first to publish anything on the company. Do your own due diligence and review the financials. Again- not for traders. For investors who want to accumulate a position in an inefficient market while no one is watching. Buy at $1- SSL is $.70. Looking for $2 this year, and higher in 2010. Coming Monday- A review of the China GDP numbers disclosed earlier this week, and what it means to investors. Home Page : www.otcjournal.com
|
