Home Page : www.otcjournal.com
Email Questions or Comments To:
editor@otcjournal.com
To
OTC Journal Members:
 |
Comments
in the BLOG |
 |
BrandPartners (OC BB: BPTR),
perhaps one of the biggest disappointments in terms of price performance
this year, looks like it wants to start behaving a bit better. Today's
edition contains a recap of what I believe happened since the company issued
its outstanding year end financials, and the stock traded down. Tomorrow
morning I will post a new BLOG entry for current comments and questions.
To use the BLOG, simply go
to the home page at www.otcjournal.com
- the BLOG will scroll down automatically on the right side of your
screen. The most current journal entries appear in the middle of your screen.
Check back frequently for updates particularly when stocks are moving to
overbought or oversold levels or in volatile markets. Your questions and
postings do not automatically appear, so don't bother posting the same
question multiple times. I personally go through to moderate and respond
to every question.
 |
BrandPartners
(OTC BB: BPTR); Coming Back After Some Harsh Treatment |
|
Early channel checks on 1st quarter
numbers lead me to believe BPTR will continue it's torrid growth
pace in the 1st quarter, and deliver a fifth consecutive report demonstrating
growth in both sales and earnings.
The company is revolutionizing bank
design, and starting to expand into other financial services markets.
On March 19th, BPTR delivered
the following outstanding year end results:
-
'04 Revenues came in at $50.6 million,
up 50% from '03's $33.7 million in revs
-
'04 Earnings came in at $14.2 million;
$.39 per share (this number is not meaningful as $9 million of the earnings
was forgiveness of debt)
-
'04 Operating earnings (this is the
important number) were $5.1 million- improving by $16 million over '03.
-
Operating EPS for '04 came in at $.14
per share. This is the meaningful number.
In short, BPTR's revenues grew
50% in '04 to $50.6 million, and the company delivered $.14 per share in
earnings. Stellar corporate performance.
If the stock traded at a mere 10x
trailing earnings, it would be $1.40 today.
The day the earnings were released,
BPTR
traded
nearly 2 million shares, the highest one day volume since negotiating their
debt reduction. The stock traded sideways for a day or two, and then started
down, leaving many shareholders stunned.
Here's what I believed happened.
I believe there were a lot of investors waiting for the earnings report
to confirm the company's performance. I believe many of those people jumped
in on the earnings report.
On the other side, I believe there
had to have been on huge seller waiting for the earnings to come out and
looking for an exit strategy. This stock traded as low as $.19 in '03 when
they were nearly bankrupt, and about a year ago the company did a financing
at $.30- this supply might not have been fully absorbed by the market.
When the seller matched the buyer
the stock didn't go up. After a day or so it became clear the stock wouldn't
be making any new highs on the year end numbers, and weak hands began to
sell. Combine that weakness with a moderate collapse in the market as a
whole, and you have people selling in a vacuum of buyers.
The stock made its bottom at $.76,
and now is rebounding nicely. As measured from last October's multi month
$.50 level, it is a perfect 61.8% retracement. I had been looking for a
drop to $.71 to add to the position, which would have been a perfect 61.8%
retracement from last August's low. It would have been irresistible at
that price.
The stock is now moving up almost
everyday on much lighter volume, which suggests an absence of sellers.
1st quarter numbers are due in about 3 weeks away, and if history repeats
itself, the stock will trade up ahead of the numbers.
For those of you who can't understand
why this stock cannot seem to achieve a reasonable valuation, a little
historical perspective is in order.
In the Fall of '03 BPTR was
days away from bankruptcy and closing its doors forever. The stock was
trading at $.05 in August of that same year. While a few months might seem
like an eternity in the market, in reality this stock has been trending
up for over 18 months.
The company has engineered it's turnaround
flawlessly, but it may take more time for the market to recognize the value.
After making it's debut on Wall Street, WalMart (NYSE: WMT) doubled
in size every year for the first three years, but the stock went nowhere.
Once Wall Street caught on, the stock made a multi year move and turned
many shareholders into millionaires.
Set aside the noise and look at the
value. As one fund manager who owns the stock told me: "I don't sell stocks
at PE's of 7 with 50% growth rates. I buy them and wait for someone else
to pay more".
It took a month to flush out some
weak hands. It looks to me like the stock is ready to resume it's climb.
|
