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Market
Comment: Summer Rally Rained Out |
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Projections for the next 52wk operating
earnings for the S&P 500 came in at $68.81, up another $.19 last week
and at another new all time high.
So far, 71.1% of companies who have
reported June quarterly earnings have beaten expectations, soundly thrashing
the average of 58%.
So, against this backdrop of outstanding
corporate performance, both in the past and out to the future, why does
the market continue to grind down nearly every day?
Oil prices remain at or above $40,
which is a major drag on the economy. Consumers are tightening their belts,
calling the sustain ability of job growth into question.
Intel (NASDAQ: INTC) delivered
right on target this week, but the top line was a little low, and inventories
were a little higher than expected. Despite providing a favorable outlook
on top line growth, inventory build up sparked fears of declining margins,
and put the whole semi conductor sector into a free fall.
The market tried to rally yesterday,
but was sabotaged when news broke. It seems Chris James - the Chief Investment
Officer of Andor Capital- is splitting from his long time partner Dan Benton.
The massive Andor Fund will be liquidated over the next several months-
$10 billion in tech stocks could be hitting the market. They were geniuses
in the 80's and 90's, but were in the wrong stocks in the 2003 rally, and
investors want out. There will be some real bargains when this plays out.
Against the backdrop of a global
turmoil and a very murky Presidential election, it is no wonder fund managers
are content to sit on the sidelines as stocks slowly grind down.
A serious summer rally looks unlikely
at this time. I believe this sets us up for one of the strongest 4th quarters
in a very long time. Probably better than last year. This is an investors
market. If you are concerned about moderately declining prices over the
next two months, get out of the market. It is not for you.
I view these anemic markets as an
outstanding opportunity to accumulate. The pendulum will swing back to
growth later in the year, and those with the patience spanning a few short
months will be richly rewarded.
18 months ago I wrote about a "GARP"
environment. GARP- Growth At A Reasonable Price. The
companies in our little universe are growing like those annoying weeds
in your garden, and you will be rewarded. If they fall off track, I'll
let you know.
Here's one stock which represents
a bargain basement steal, and represents a classic GARP
opportunity.
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NuTech Digital
(OTC BB: NTDL) Announces Outstanding Preliminary Results |
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NuTech Digital released preliminary
sales results for the June quarter today just after the market closed,
and the company is finally delivering the way I expected them to at the
get go.
This company is on a roll. President
Lee Kasper has taken the capital that was raised last January, and put
it to use.
NuTech announced the company
will deliver at least $1.5 million in revenues in the June
quarter. This is the best top line performance in the company's history,
and represents a 60% increase over the same quarter last year and a 49%
increase over last quarter.
Not only is the growth gratifying
to see after a one quarter delay, the forward looking statement is even
more exciting. Mr. Kasper stated "We believe the record June quarterly
results are at the front end of a major expansion phase. We are implementing
additional growth strategies, which could put us at the beginning of a
much steeper growth curve and allow us to accelerate from June's record
level.”
NuTech is my idea in the coming
digital home entertainment revolution. The company both distributes and
creates content in the exploding DVD market.
NuTech is on the verge of
some major and very exciting breakthroughs with high profile entertainers
to produce and distribute hi definition concert DVD's. There are no guarantees
they will sign anyone huge, but they are on the verge.
Here's the long term picture on the
stock. As you can easily see, there was a nasty decline earlier this year
in conjunction with the shares in January's $2.2 million financing becoming
free trading.
The pricing on the financing was
$.40. Guess where the stock is trading right now: $.40. You can
pick up shares at the same price the short sighted institutions invested
last January.
The stock is completely blown out,
and all the sellers who wanted to sell are pretty much out. I don't believe
this one is very risky as the company is consistently cash flow positive
from operations. One time, non-cash expenses made the financials look worse
than they really were. The company makes more than it spends in cash. They
can be around for a very long time without raising any more money.
There are about 21 million shares
I&O, which yields an $8.4 million market valuation. June's quarter
has the company's annual revenue run rate at $6 million, with accelerating
growth from here.
Therefore, you can pick up the stock
at 1.4 times annual sales. Most companies with these kinds of growth
rates trade in the 3 to 10 times sales range.
The right series of events should
put the stock back into the mid range of its decline- about $.75.
You want GARP: You got it here.
Here is the complete text of today's
news release for your review:
NuTech Digital
Announces Preliminary Unaudited
Second Quarter Revenues
____
Van Nuys, July 15, 2004
(BUSINESS WIRE) -- NuTech Digital, Inc. (OTCBB: NTDL), is pleased to announce
today its preliminary unaudited second quarter revenues for the quarter
ending June 30, 2004.
NuTech revealed that
revenue for its second quarter ended June 30, 2004 will be in excess of
$1.50 million. This figure represents a 60% increase over the same
quarter in 2003, and a 49% increase over the March quarter in 2004.
"We are pleased with
our preliminary results. In the June quarter we delivered the strongest
top line in company history. This clearly demonstrates NuTech Digital is
on track to perform up to its strategic plans and continues to make progress
toward achieving profitability," stated Lee Kasper, President of NuTech
Digital, Inc. “NuTech’s newly established growth trend should continue
for the remainder of 2004 and into 2005. We believe the record June quarterly
results are at the front end of a major expansion phase. We are implementing
additional growth strategies, which could put us at the beginning of a
much steeper growth curve and allow us to accelerate from June’s record
level.”
About NuTech Digital
NuTech Digital is a leader
in Digital Rights Management technology for the secure Internet distribution
of entertainment content. NuTech Digital is a pioneer in the home entertainment
product market, with more than 600 exclusive DVD titles and a growing library
of High Definition music concerts. NuTech Digital offers original
and licensed content via a worldwide network of distributors, retailers
and Internet entities. NuTech Digital also has broadcast availability,
DRM, and video on demand for many of its new products. NuTech Digital
recently introduced its DRM technology, which enables the secure distribution
of high-resolution digital content via the Internet. (www.nutechdigital.tv)
NuTech’ Digital’s DRM platform allows its feature films, concerts, children’s
animated films, karaoke software, Japanese animation and late night programming
to be accessed via secure downloads, and included in online subscription
services. NuTech Digital also facilitates authoring services to content
providers in the entertainment industry.
Cautionary Statement
This press release contains
forward-looking statements that involve risks, uncertainties and assumptions
that if they never materialize or prove incorrect, could cause NuTech Digital,
Inc.'s results to differ materially from those expressed or implied by
such forward-looking statements. All statements other than statements of
historical fact are statements that could be deemed forward-looking statements,
including any projections of earnings, revenue, or other financial items,
any statements of the plans, strategies, and objectives of management for
future operations, any statements concerning proposed new products, services
or developments, any statements regarding future economic conditions or
performance, statements of belief and any statements of assumptions underlying
any of the foregoing. These statements are based on expectations as of
the date of this press release. Actual results may differ materially from
those projected because of a number of risks and uncertainties, including
those detailed from time to time in NuTech Digital, Inc.'s reports filed
with the Securities and Exchange Commission.
Contact:
NuTech Digital, Inc.
Carmen Castillo
Investor Relations
818-994-3831x10
ccastillo@nutechdvd.com
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