To OTC Journal Members:
 

NeWave (OTC BB: NWAV): Riding a Rocket Ship of Revenue Growth

If you define Faith as "Belief in the Absence of Data", you can draw on your faith to believe you are eventually going to make money in good growth companies. 

The "Absence of Data" refers to price appreciation in stocks. There is little or no price appreciation in non-energy companies in this anemic  market. I believe we are on the tail end of a fairly nasty correction, and those with a little patience will be rewarded. On the other side, the market is more risk focused right now, and has chosen to adopt the posture that sky high oil prices will lead to slowing economic growth and eventual recession. I've come up with some very interesting data looking at both sides. It will be published in the weekend edition.

I have faith. I have faith because I have been trading microcap stocks for 20 years, and my biggest money makers always came after two to five year holds. I have never been badly hurt in any companies that delivered good fundamental growth. I have lost a lot of money in companies with failed business models. The key is to hold and add to positions in sideways and down markets. Sell when they're all buying. Stick with the companies who prove themselves.

Somebody is going to wake up to NeWave at some point in the future. If the company continues to take off like a rocket, your faith should be rewarded.

NeWave owns and operates www.onlinesupplier.com. They have a turn key solution for putting individuals in business on the internet for a nominal fee. A mere $9.95 gets you started, and an ongoing monthly fee of $29.95 keeps you going.

NeWave has clearly hit a sweet spot with consumers, and the proof is in the numbers. The company is delivering unbelievable growth, especially when you consider it was a zero revenue start up last August.  The growth has been 100% organic- none has come from acquisitions of existing companies.

Today, just after the market closed, NeWave reported July sales figures. The company delivered $900,000 in revenues for the month. Here are the historical numbers:

• Quarter ending March 2004: $1 million ($333,000 average per month)
• April: Unreported
• May: $600,000
• June: $740,000
• July: $900,000 (as reported today)

Based on the last three months, NeWave's revenues are growing just north of 20% per month (not per year). If the company can maintain this blistering pace (which would probably be too good to be true), the company would deliver about $2.3 million in revenues in the month of December. About $8.9 million for the year. This is likely an unrealistic expectation, but nevertheless substantial growth should continue.

Gross margins in the March quarterly financial filings were 90%. That is Google like profit margins. If you assume the company will deliver somewhere in the $1.6 million revenue range for the June quarter, the company would generate $1.44 million in gross profits. Since NeWave moved to a much larger facility in June, you can expect some high one time expenses associated with the move.

I anticipate NeWave will probably report its first profitable quarter in Q3. 

The chart of the stock looks a lot like the chart of many other technology companies over the past four months. Up at a nice level. Now down, on very light volume.

Faith: Belief in the Absence of Data. I have faith this stock will eventually trade up once again. I have been through too many tough markets, and there are always great opportunities for those with Faith and patience.

Long term price target: $8 to $10 if the company continues to stay the current growth course.

Here is the complete text of today's news release for your review:
 

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