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There are two new BLOGS up
on this week's two streaking stocks: PhotoChannel Networks (OTC BB:
PNWIF) and Nighthawk (OTC BB: NIHK). Both had big runs this week and
you
should be making a great return if you got positioned properly.
Read today's BLOGs for my thoughts on each idea.
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Commerce Planet
(OTC BB: CPNE): Thoughts for 2007 |
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Anyway you slice this pie, CPNE
has
been a huge win for OTC Journal subscribers in 2006, and 2007 could
be just as good or better with a potential bump in the road.
I have been calling CPNE my
#1 idea since the stock was $.50 for all of 2006. Will it be my #1 stock
idea for 2007? A little too early to tell, but it certainly has the potential
to be there.
The weekly chart of the stock pretty
much says it all for 2006. Was I spitting mad the stock did not trade to
$2 as I had forecasted? You bet. Big disappointment. Am I pleased when
I receive emails from investors who tell me they still own the stock at
$.38? You bet. Do I still think it's going to $2? You bet, and probably
a lot higher.
The folks that run CPNE are
probably the most brilliant email marketers on Planet Earth. Every thing
improved this year when they started offering a greater value proposition
to their members. Their focus on bringing greater value to their subscribers
is showing in both membership retention and new memberships.
A little retrospective review is
in order. Let's look at the numbers for 2006:
-
Q1: $3.3 million revs, $200k profits,
<$.01 EPS
-
Q2: $7 million revs, $1.4 million
in profits, $.04 EPS
-
Q3: $7.6 million revs, $3.1 million
in profits, $.07 EPS
-
Q4: ?
There's the question: Q4? But, is it
a question? I don't believe it is. I believe both Q4 and Q1 '07 will be
outstanding. Here's why. CPNE clued everyone in to their Q4 progress
with the December 12th press release wherein CPNE disclosed it had
set an all time weekly record for new memberships. The company landed 20,000
new memberships in the first week of December alone- an all time record.
In Q3 91% of CPNE's revenues
came from membership fees.
Based on the way CPNE books
its revenues, December's new memberships spill into January revenues. Hence,
we have a certain comfort that numbers will continue to improve over the
next two quarters. After three consecutive quarters of strong growth and
substantial profits, haven't they earned the benefit of the doubt until
proven otherwise?
Despite tripling this year, fundamentally
CPNE
is
still one heck of a value proposition. Think about the following. Last
quarter they earned $.07 per share. This suggests annual earnings of $.28
per share with no growth. The PE Ratio for the S&P 500 is about 17.3.
CPNE
has grown faster than any company on the S&P 500 in 2006. If CPNE
were to trade at the 17.3 PE ratio the S&P sports, it would be $4.84.
This company is making $1 million a month.
There's the fundamental side. Now,
let's discuss the technical side. There are many who feel CPNE is
very undervalued, and don't understand why the stock is not higher. The
problem probably relates to about 14 million shares owned by early financiers
who own their shares for next to nothing and have probably been selling.
No one can say for certain until there are updated filings, but it seems
likely this has been the source of supply.
Over the past couple of weeks the
supply has dried up and the stock has been drifting slightly higher on
light volume, but I believe there could be a warning flag here.
I believe there is a chance- just
a chance, far from a certainty, that CPNE might sell off in the
first half of January. Why? Consider the following. The supply off this
stock has dried up considerably in December. Why? Are they out of shares.
Hardly. There could be a lot more for sale. Think about this- if you sell
a stock in December at a huge profit, your taxes on the profits are due
in 4 months. If you sell the stock in January, you pay the taxes in 16
months. Not a bad return for waiting a few weeks.
If the stock drops it will be a great
buying opportunity.
Here's what to look for in 2007:
I believe you might see the first institutional research following on the
company. You might see major institutional participation in the stock.
You might see the company graduate to a senior exchange- AMEX or NASDAQ
SC- you might see the company use some of its cash for acquisitions- you
might see the company bought out by either a private equity group or another
public company.
Also- you might see the stock at
$5 plus if they stay on path. Yes, I will be following this one in '07.
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