Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
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A
Quick Reminder- Upcoming Audio Interviews |
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Next Wednesday, August 8th, we will
begin a series of interviews with the CEO's of our four featured companies.
The interviews will be carried in the Wednesday editions on August 8th,
15th, 22nd, and 29th.
The interviews will be streamed via
audio feed on the Internet. When you receive your newsletter, simply click
on the link, and the live interview will come out of your computer speakers
as long as you are on the Internet while you are listening.
We will provide a written transcript
of each interview for those who do not have speakers on their computers.
The first interview will be with
Jim
Cassina, President and CEO of Energy Power Systems Limited. It
will be published next Wednesday, August 8th. The interview will
not be live, but we are accepting questions from members. We will ask them
on your behalf.
If you have any questions for Jim
Cassina, please email them to eypsf@otcjournal.com.
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Envoy Communications
(NASDAQ: ECGI): Has It Finally Hit Bottom? |
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Envoy Communications has
been slowly but steadily dropping since Mid-May. We believe the stock may
have finally hit bottom and is positioned for a rebound. The chart demonstrates
the recent slide of the stock. However, as shown in the chart, we believe
there is finally light at the end of the tunnel.
In a press release this past Thursday
the proverbial cat came out of the bag. The company revealed the June quarter
financial results would show revenues up 45% from the same quarter
in 2000. However, the company also mentioned EBITDA earnings would
be slightly down from the same quarter in 2000. Perhaps the expected
earnings decline helps explain the weakness in the stock.
Envoy had already achieved
$3
million in cash earnings through the first half of fiscal 2001. Under
a worst case scenario, another $1 million would put the company at $4 million
through three quarters. The fourth quarter is generally the company's strongest,
and we could easily see net cash earnings for fiscal 2001 at $6 million.
Year end numbers for Envoy
should therefore be in the $85 to $90 million (CDN) in revenues, with $5
to $6 million in cash profits (taking out depreciation and amortization
non-cash expenses). This is the
OTC Journal's own guesstimate.
Based on today's closing price the
market is valuing this company at $33 million US or $50 million CDN.
The
current market value is roughly half its annual sales. The stock is trading
at less than ten times this year's cash profits with a 45% growth rate.
By any market standards this stock is grossly undervalued.
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Recent
Positive News Developments |
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On July 24th Envoy announced
its intention to buy back two million shares of its own stock
in the public market. This moves suggests management feels the best use
of its valuable cash is to buy its own shares at these prices. Click
Here to review press release.
Its Watt Group subsidiary
recently announced a major contract award in China. This contract
award comes right behind a recent contract win for Watt Group in the Bahamas.
The company is rapidly expanding internationally.
Contract flow continues to be excellent,
and the company's current customer base still includes adidas-Salomon,
ASDA, BASF, CIBC, Castrol, CDNOW, FedEx, Hewlett Packard, LCBO, Microsoft,
Honda, Panasonic, Pizza Hut, Prudential (USA), Safeway, SalomonSmithBarney,
Sprint Canada, Steelcase and Wal-Mart. Their relationship with
Wal-Mart
in Europe continues to expand rapidly.
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Institutions
Done Selling? |
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Institutions have consistently been
unwinding their positions in the stock for months now. While corporate
performance is on track, Envoy's industry group has been out of
favor by money managers since the economic slow down began. Fund managers
are going to cash at any price.
Our editors have heard rumors one
institution recently sold 1 million shares. This is also rumored to be
the last institutional block for sale. Traders believe the stock is finally
positioned to rebound as supply has finally dried up.
Omnicom (NYSE: OMC), one of
the largest companies in Envoy's peer group announced its June quarter
results on July 24th. Wall Street was amazed to learn business was not
as bad as expected, and the stock rose 10 points from $78 to $88 in four
days.
On August 14th Envoy will
release its 3rd quarter earnings statement. The stock has been trading
as if the company's business is falling off a cliff. Perhaps investors
will recognize value and bid the shares back up to a reasonable level.
At today's
closing price of $1.65 this stock is already priced for disaster. If you
don't currently own the stock now would be a good time to consider establishing
an initial position. If you own it higher prices, now would be a good time
to accumulate more prior to the upcoming June quarterly earnings release.
This stock is the contrarian's dream investment at these levels.
Charts Provided Courtesy
Of TradePortal.com
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