To OTC Journal Members:
 

Stop & Shop Signs With PhotoChannel (OTC BB : PHCHF)

WalMart and Costco Canada have both signed on with PhotoChannel. CVS, with its 5,000 plus neighborhood pharmacies came on board this summer. Today, it was Stop & Shop, one of the largest grocery chains in the North East, signing up to have PhotoChannel handle their "Online to Retail" photo developing service.

Stop & Shop has 565 stores in the Northeast. Of those 565 stores, apparently 360 locations have film developing capability. In fairly short order, you will be able to visit www.stopandshop.com, locate a store near you, upload your digital images for development at your local store, and run by to pick up your pictures. PHCHF will run the internet interface in return for collecting a couple of cents for every print ordered. When you go to their web interface, it will say "Powered by PhotoChannel" at the bottom. 

If PHCHF averages 5 orders per day from each store, it translates as follows: each order is generally about 40 prints. At $.02 per print, each order generates $4. $4 times 360 stores equals $1440 per day, which is about $44,500 per month and $534,000 per year. 

This recurring revenue stream goes on indefinitely, and should grow very dramatically over the next 10 years as more shutter bugs start using the service. In addition, there will be add on offerings, including photo albums, special gift frames, etc.

I would expect shares of PhotoChannel to start ramping up considerably as we move into the seasonally strongest part of the year for film developing. PHCHF should start trading up very nicely throughout the Holiday season.

This is a pretty short term look at the stock. So far, it has enjoyed a strong year. Up until early July the stock had been camped fairly close to $.10 for nearly two years. After the CVS deal was announced, the stock started to behave much better.  In the July to August time frame it made the move from $.10 to $.15. August to Mid September the stock consolidated in the $.15 range.

From mid September to early October, the stock made another nice move, surging to a high of $.275 on October 6th. When have since had a long overdue pullback, and $.20 represents a perfect 61.8% retracement of the $.15 to $.275 run. Those who follow the OTC Journal know I strongly endorse accumulating stocks in a uptrend on pullbacks. Sell on the big streaky moves when everyone wants to buy.

If you like the whole theme of online photo finishing, PHCHF, or PNI on the TSX to our friends in Canada, is perfectly positioned in the very high end margin side on online photo finishing. They don't have to build photo developing labs, they don't have to build out fulfillment centers- they just have to find more retailers that want online photo finishing, and convince them to use their very robust back end. PHCHF implements, then sits back and collects money from a very powerful recurring revenue stream and very low overhead.

This company is likely to do a reverse split- Institutions are taking a hard look. The Shutterfly (NASDAQ: SFLY) IPO did not faire very well. Shutterfly is focused on mail order only. They have had the expenditure of the printers and fulfillment center. The company came public sporting a $350 million market valuation at $15. It surged to $16 temporarily, and is now just under $13. 

PHCHF is only trading with a $60 million market valuation, and probably processing just as many prints- the big difference- PHCHF will not show the top line, but have equivalent, if not better gross profits with far lower infrastructure costs.

Hence the need for the reverse split- as the company starts delivering more robust revenues and earnings, it will be looked at by institutional investors who simply can't participate in a $.20 stock. Be a shareholder before institutions can begin to participate. 

Here's today's news for your review:
 

Subscribe

Information is power and timely information is profitable. Become informed and profit from OTC Journal Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the OTC Journal Email Newsletter on a regular basis.

To ensure newsletter delivery, you can add any additional email addresses you may have to the OTC Journal Member List. Receiving the OTC Journal Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the OTC Journal recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.

Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the OTC Journal, simply follow the instructions located at the bottom of every OTC Journal Newsletter Edition.

Go Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts. MarketByte LLC has been paid a fee of $30,000 by PhotoChannel for coverage of the company. In addition, MarketByte has purchased 500,000 free trading shares at a cost of $.1332 per share. This should be viewed as a potential conflict of interest. The management of MarketByte reserves the right to buy and sell shares of PhotoChannel at its discretion.

All statements and expressions are the sole opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

From time to time MarketByte LLC sells shares in the open market it receives as compensation for coverage of client companies. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, the editors do not view the sale of the shares as contradictory to any advice delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

The editor, members of the editor's family, and/or entities with which they are affiliated aside from MarketBtye LLC itself, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter. Some of the companies featured in the OTC Journal pay a cash ESP fee to an affiliated technology company ranging from $2,000 to $5,000 per month for internet related technology services.

The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $140,0000 in Dutchess Private Equities II LP (“the Dutchess Limited Partnership”), a limited partnership in which the MarketByte Pension Plan is a limited partner. The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $190,0000 in the Longview Fund (“the Longview Limited Partnership”), both limited partnerships in which the MarketByte Pension Plan is a limited partner. No one associated with the MarketByte Pension Plan has any knowledge, information, or control as to any past, present, or future investment activities of the Dutchess Limited Partnership or the Longview Fund.  The Dutchess Limited Partnership is one of two hedge funds managed by Dutchess Advisors.  Dutchess Advisors and Longview periodically refers companies to MarketByte LLC for possible coverage by one of the MarketByte LLC publications, which publications include The OTCJournal.com Newsletter.  Dutchess Advisors or Longview may or may not own shares in the companies that it so refers to MarketByte. MarketByte has no information (outside of information readily accessible to the general public such as SEC filings) as to whether Dutchess Advisors or Longview owns any shares in the companies that it refers to MarketByte LLC.  The above relationships should be viewed as a potential and/or actual conflict of interest by shareholders and prospective shareholders of MarketByte LLC client companies. 

The profiles, critiques, and other editorial content of the OTCjournal.com may contain statements that appear foward relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN  SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN  CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.govand/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm. Disclaimer ID:$subst('Recip.userid') Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.  MarketByte LLC's mailing address is 4653 Carmel Mtn Rd Suite 308 #402, San Diego, CA 92130.