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NeWave Corp. (OTC BB: NWAV): 3 For 1 Split Should Equal Action

I haven't written any content about NeWave for some time. The company has been transitioning in several arenas to position itself for growth in 2005. If the company can grow as much in 2005 as it did in 2004, higher levels are in the crosshairs for this stock.

For those who need a refresher course, 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. From a dead start up in August of 2003, NeWave has since grown to having serviced over 125,000 individuals, and is currently generating high margin revenues approaching of $1 million per month. 100% of the company's growth has come organically- they have not acquired any existing businesses. Most of their revenues are recurring subscription fees, which makes for a powerful and profitable business model.

Revenues are coming in as follows: The company achieved $800,000 in revenues from Aug '03 to year end. 2004 is looking like it will come in somewhere in the $6.5 to $7 million range (700% top line growth year over year). The company will have minimal negative cash flow for CY'04, and should turn profitable in '05 if they come any where near projections I have recently seen.

Today, just after the market closed, NWAV announced the company would be doing a 3 for 1 forward stock split on February 18th. If you own one share today, you will own three shares on February 18th. The symbol will change, and once I know the new symbol everyone will be advised.

I have been covering NeWave for about 1 year. I first published on the company on February 15, 2004 at $2.80. The stock is currently trading at about $4, for a net return of 42% since the first edition.

NWAV has not made any serious effort to get its story in front of investors. The stock is thinly traded and tends to move a fair amount on low volume. Investors have often observed that the stock is difficult to buy or sell without moving the market.

I believe all that is going to change after the 3 for 1 stock split. The company intends to start getting its story in front of investors. The 3 for 1 split should help increase the liquidity considerably, and psychologically make the stock more appealing. Rightly or wrongly, investors perceive a considerable amount of upside in companies with 700% growth rates trading at about $1.50.

Forward splits are always looked on favorably by the market. You might want to be positioned ahead of the crowd in this case. Look for a lot of developments out of this company in the coming months.

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