To OTC Journal Members:

Here's the first in a series of two "Old Economy" ideas that I plan to introduce this week. Both have understandable business models, huge and growing markets, and double or triple digit growth both behind and in front of them. Both have strong charts, and catalytic events both now and in the pipleline that could get their stocks moving. Today's idea is a "one off"- meaning I won't be providing ongoing following. I'll just do some blog postings on it. It's an idea that you might love, and if so you will want to own the stock. New contracts will keep this one moving. For your consideration:
 

Smart Energy Solutions, Inc (OTC BB: SMGY): A Simple Solution To a Big Problem

Today's idea should only be considered by investors who have, or know someone who has been inconvenienced by a dead battery in their car or boat. That's pretty much everyone including you at one time or another. Am I wrong?

Ever come out to your car or boat, go to start it, and the battery's dead? What a pain in the butt. The device you are looking at was invented by an Israeli engineer who owns a fleet of vintage cars. Everytime he tried to take one for a Sunday drive, the battery was dead. When your car is not running, there is always a little drain on your battery. Therefore, if you don't start your vehicle for a period of time, the battery often dies.

This simple device, known as the Battery Brain, attaches to the positive terminal on your car or boat battery, and prevents it from ever draining to the point where it won't start.  It takes about 5 minutes to install. Simple, effective, and cheap. The device sells for about $50 from the manufacturer, Smart Energy.

SMGY sold 68,000 of these in 2006 in the first year of real commercial introduction, and expects to sell no less than at least double that amount- 130,000 in 2007. Q1 sales were up triple digits, so their growth is definately gaining momentum.

The device has a security feature as well. The keyless remote you see on top of the battery disconnects and reconnects the power supply completely, thereby aiding in theft protection and/or inadvertent use by family and friends.

The market for this product is absolutely enormous. There are 600 million vehicles in existance, and that number goes up everyday. 60 million new vehicles will be manufactured this year. They are all candidates. There is no competition, and the product is patented.

Aside from the obvious retail market, there are a number of other, much larger markets. Today, there are 25 car dealers who install this product on every new car. They sell a private label version as an option, and charge $600. It prevents the batteries from dying while the cars are on their lots, and becomes a profit center on a car sale.

As of the end of March, SMGY boasted $2 million in cash on its balance sheet. Revenues for the March quarter were about $650,000, which is triple where they were in March of '06 ($210,000)- that's a 200% growth rate. There are 76 million I&O, so the market is placing a value on the company of about $35 million- by pub co standards this is very small and offers plenty of upside. If they can deliver sales of 130,000 units in '07, the revenues will rocket to $6.5 million annually and the company will turn profitable. 

Here's the main reason I believe this is a stock you want to own. Ultimately, the only reason to own this stock is price appreciation. It's pretty much all we care about. 

This company has some major potentially catalytic events in the pipeline. This product is currently being evaluated by a number of very large household type names with very large delivery fleets. Think of any big name that has big fleets- beverage companies, package and postal, freight carriers- etc. Think of the name, and they are probably looking at the Battery Brain. Dead batteries are a big problem for these companies. It costs a lot of money to have a delivery vehicle down on the side of the road.

Look for major purchase orders from large delivery fleets to provide the fuel to get this stock moving. Not just US- think International as well. The current evaluation programs are well beyond the scope of just the US.

The chart looks great as well. This stock made a nice run from December to February like so many others, and has treaded water since. Here's what I like- it hasn't gone down significantly. It has only achieved a 38.2% retracement and has held beautifully. Seller and buyers are matching up nicely, and those who wanted out have gotten out. The stock averages about 140,000 shares daily, so investors are starting to find out about it.

I believe this stock is destined for at least $1 this year. Nearly a double on your money from current levels. The stock might want to try to find its way down to the 61.8% retracement level of $.46- but if it was going to it probably would have already. Therefore, you can set your SSL at about $.43- if it gets down there it's probably going to get into trouble, but I don't believe it will.

SMGY delivered a very exciting catalytic event post close today. The company announced it has shipped private label units to Telstar, its European Distributor for the Royal Dutch Touring Club. 

According to the press release, the Royal Dutch Touring Club is Holland's version of our AAA, and has 3.5 million members. The Battery Brain will be featured in their monthly newsletter as a suggested addition to your car. Members will be able to buy it from a number of automotive web sites at a discounted price. If it's like AAA, it will cut down on their towing obligations.

In addition, Telstar is featuring the Battery Brain in a major European PR and advertising campaign that will cover 125 automotive magazines, 130 transport magazines, and many local newspapers.

There is a ground swell of interest in this product. This is only the beginning. Like the post it note and the paper clip- very simple solutions to very pervasive problems.

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

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