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Standard Oil and Options Media: What Do They Have in Common?

Options Media is starting to deliver some really important corporate events, so it's time to revisit. This not so hot penny stock has about hit bottom. It's worth summarizing, because the stock is really cheap right now and no one is paying attention. What better time to make money?

So, what do Standard Oil (long ago merged into BP) and OPMG have in common? Believe it or not, there are two notable similarities. Standard Oil was once a small company that became very big as demand for its products and services burgeoned along with changes in the way people got from place to place. Standard Oil was originally formed to provide Whale Oil for oil burning lamps. As electricity became widely available, Standard Oil model moved to fossil fuels for the emerging automobile market. 

OPMG is experiencing the same growing demand for its products and services as advertisers need more cost effective ways to get their message to the consumer. This is a mega trend away from mass marketers like TV to a more targeted electronic platform for a lot less money.

And, there's one more similarity. As of the close today, they both have the same investment banking firm. Standard Oil used 132 year old Jessup Lamont as it's investment banking firm (of course, they weren't 132 years old back then). They were the investment banking firm of choice for John D Rockefeller. As of the close today, OPMG has retained Jessup Lamont as its investment banking firm.

Their mission will be to help OPMG leverage its digital advertising platform with possible merger and acquisition candidates, thereby helping the company grow bigger and more profitable over the coming months and years.

And, speaking of profitability, I now have a pretty good picture of Q2. You're going to be surprised. I believe from a cash flow perspective, you're going to see a huge improvement in Q2 over Q1. OPMG will still probably notch a loss, but a very small actual cash loss. I know it's not evident from the day to day gyrations in the stock, but OPMG is in fact, close to turning the corner to cash flow positive. CEO Scott Frohman has reduced overhead while improving on both top line growth and moving into higher margin services.

Just last week, the company announced it had acquired a new database of 200 million permission based email addresses and 50 million like businesses. This is the raw material from which they make money, and it's like pouring more whale oil in the lamp- you're going to get a bigger and better revenue and earnings picture as OPMG makes this data available to its Fortune 500 customers.

Now, here's the really good news- the stock is cheap, cheap cheap. This is one that violated my SSL (suggested stop loss) in the early going. I have been waiting for the stock to stabilize at a very low level before suggesting it's got no where to go but up, and I believe we're there now. It's cheap and has traded sideways for sometime on very low volume. It looks like a relatively low risk entry level.

I originally picked this idea at $.45, with a $.30 SSL. The stock has made a trip below $.30, so if you were interested in preservation of capital you should be out right now. If you were willing to hang in there for the long term, you might still own the stock. Or, perhaps you didn't invest in the idea, in which case you should reconsider now that the stock has hit bottom and there's very little selling pressure.

The stock might just trade back up rather easily north of $.30 (see IXEH earlier this week). However, under the $.30 level, there doesn't seem to be much for sale, which strikes me as the level for you to own the shares.

From here, the story will continue to develop, and as successive quarters unfold, investors will start to become believers. The sell side volume will dry up, and the stock will behave much better. It's worth remembering their year over year growth rate is kind of infinite. One year ago they weren't in busines. Today, they are generating about $1 million in monthy revs, and the gross margin improvement from Q4 of '08 to Q1 of '09 was impressive.

At $.30 or less, you're paying one times annual revenues to own this stock. Lots of upside, and techincally there appears to be little downside now. Fundamentally, great improvement. 

Here's today's news, and I hope there will be lots more to come out of this new Investment Banking relationship:
 

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