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Comments in the BLOG

There are two new BLOG postings for you to review. One is up now, and one is coming later today. Callisto (AMEX: KAL) made a valiant effort to trade higher today on the patent news, but has only managed to eke out a small gain. On the plus side, volume was very good. It was the third highest volume day of 2005. Look for a BLOG posting on KAL by tomorrow morning. 

On the negative side, recent idea UpSnap (OTC BB: UPSN) traded below the firm stop loss level of $2.30 today. If you are not already, you should be out with a manageable loss. Better to be out wishing you were in, than in wishing you were out. There is a BLOG entry with my thoughts. Since this stock is so volatile, when it shapes back up we can always go back in. I believe this stock could be under attack by short sellers. If so, the turn back up could be exciting if and when it happens.

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 reasonable question.
 

TelePlus (OTC BB: TLPE) Pegged at $2.10 in 12 Months

Investology research analyst Waheed Hasaan was out with updated research notes on TLPE today just before the market opened. This former senior research analyst from UBS Warburg covers TLPE at his boutique firm, and based on Q3 results has pegged a $2.10 52 week price target on TLPE. 

Therefore, from current levels, Hasaan is forecasting the stock as nearly a 10 bagger over the next year. This may seem farfetched, but the numbers support the possibility.

Hasaan points out their monthly revenue rate has improved from $1.1 million to $2.2 million as a result of strategic acquisitions. 

Moreover, Hasaan has computed the company performance on a proforma basis had TLPE been functioning the entire year as it exists today. Here are his conclusions on a proforma basis:

• Annual Revenue Run Rate: $37,180,501
• Total EBITDA earnings: $2,422,705 (earnings before interest, taxed, depreciation, and amortization)
• Total Net Earnings: $1,922,705
• EPS: $.026

Acquisition Canada Reconnect was not included in the Q3 numbers. It will be partially included in the Q4 numbers. Canada Reconnect will contribute $5.4 million in annual sales and deliver $1 million in EBITDA earnings. Hasaan also projects the company as a whole will enjoy organic revenue growth of about $4 million annually. This runs the total to about $35.8 million. I'm not sure where he gets his last $1.3 million from, but it is a small enough difference.

There is nothing I would like better than to see a ten bagger over the next year. To see $2.10 a number of things need to happen, some out of the company's control. 

First of all, the company will probably have to deliver the forecasted $55 million in 2006. Secondly, the company would have to maintain its current gross margins of 27% and deliver real positive cash flow. Thirdly and probably most importantly, to achieve the kind of valuation TLPE would sport at $2.10, there would have to be another bubble formation in small telecom companies. The market would need to fall in love with these kinds of stocks. There is no love fest right now. 

The market generally heads in the right direction, but is not a rational entity. In a rational market, lots of stocks would be behaving much better. The market acts irrationally, and justifies later. The market needs to get irrational about telecom again.

Technically, there isn't much to report on TLPE. Like so many these days, TLPE traded up nicely when they announced the positive results from Q3. The stock then turned around, and gave back its gains, coming straight back to its support level depicted by the blue line. It is now encamped at about the $.22 level.

If you want to read Hassan's update on TLPE, simply click here, and a PDF will open automatically. You can also visit the investor section at the company's corporate web site and click on the "Latest Research Report" button. It's at http://www.teleplus.ca/investors.php

If Hassan is right, you cannot own enough of this stock over the next year. This one is a pure numbers idea, and doesn't look to be too volatile. It should be accumulated around this $.22 level for a kaching as recognition improves. If you like a microcap stock with real numbers, positive cash flow, growth, and the opportunity to accumulate while the stock is quiet, this one is for you.

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