Those who were ready to pile in on TLPE as it rocketed up the charts two weeks ago should take notice right now. At a mere $.30, the company’s entire market value is only $25 million. Enterprise value (market cap plus debt) is only $34 million. Yet the company is nearly a certainty to deliver north of $30 milion in sales in ’06, and be cash flow positive in the millions.
Since the stock’s meteoric rise north of $.40 earlier this month, a retracement process has been taking place. This is normal and natural. It is also normal and natural to want to get on board a streaking train when every other lemming is going off the cliff.
There is tons ahead of TLPE on the positive fundamental side to come in ’06. If the telecom pendulum swings back to telecom on Wall Street, this one will shine and get fully valued.
Recent press releases concern fairly high profile new hires. Ford lays of 25,000. TLPE is hiring. Which company do you think is expanding?
The stock has dropped a hair below its 61.8% retracement level. I told you to sell some or all at $.41. Now I’m suggesting it is time to accumulate. If you want to be in this stock, now is the time. $.30 to $.31- Accumulate now. You can be a seller on the next surge if you are a trader. For traders- a $.27 stop loss is recommended.
Questions and comments welcome.
you guys have been great. excellent commentary and i have made quite a lot of money on a lot of your picks/advice. thank you.
Editor: What a nice comment. A big change from the FAll. Hope we can keep it rolling.
I like the Liberty Wireless move, with the office in Miami, Fl. However, I am a little concerned over the divesting of the retail stores. Apparently, they are a drag on the company’s bottom line, but do you think this signals a little indecisiveness in managment? A year or two ago, they were planning to have 37 stores by 2007. Now we are heading to zero stores. What is your take?
Editor: I would take the opposite view. I have really warmed up to this managment team, and I can tell you if it ain’t profitable or cash flow positive, they don’t want it. If the company is cash flow positive they can be around for the long term until they are back in the sweet spot of the market. The biggest mistake I have ever made trading stocks is holding on to my losers for too long. If I had been quicker to sell when things were going well, I’d be way ahead of where I am today. I believe the move enforces my view that the management team is solid here. Now- the real question is how much money they can make in their existing businesses.
I pay for spec stock info that’s not right nearly as often as yours. You find some really quality companies. And for the record, I just don’t see how TelePlus can keep from being a big one! Thanks..Mike
Editor: To me, this one is all about profits. They have robust sales, but they need to generate positive cash flow. If they do that, you will make money in the stock. Since we have to wait a while for financials as it is audit time, it could be a while before we get hard data. However, preliminary numbers could be available.
I’ve just increased my position in TelePlus another 10,000 and expect good things this year. Thanks for the heads up.
Editor: Look for this stock to really trade well once telecoms come back into favor.
How can Teleplus ever generate meaningful earnings per share when Cornell Capital owns 270 million shares of stock they are free to sell once the stock is registered? TLPE will have 355 million shares outstanding after the SB-2 offering is complete. If they earned $2.7 million after tax that only amounts to a penny per share. And if Cornell started selling the price would never go up. Andy
Editor: The shares have not been issued yet. They have 3 years before they can be converted. That gives them 3 years to take out the debt without a conversion. In the right market environment, that could easily be achieved with either a much more favorable telecom market or traditional bank financing as they grow stronger financially. I believe the dillution in ’06 will be about 2 million shares from warrants.
I’ve increased my position in TLPE on the recent dips but would like to know if the stagnant price over the last few months and yesterday’s drop has anything to do with recent fundamentals. How’s this company doing? Thanks mark
Editor: Fundamentally, the company is doing very well, and their progress suggests the stock is entitled to trade considerably higher. However, the recent SB2 filing to register 300,000 million shares is troubling. If they really have to issue these shares to cover their debt, this stock could be in trouble. The holder is one of the most notorious aggressive selling funds out there. Looking into the matter a bit more before passing judgement.
When are you coming out with an update on TLPE? I noticed that on 3/4 you say the Cornell shares are not a big deal, but in the 4/11 comment you state that it is troubling. Which is it? Big deal or troubling? Would love to see your analysis and views on this.
Editor: I need to determine if they are going to be in a position to sell as soon as this is effective, or if they can only sell if the payments are in default. On the plus side, I hear anectodally that Cornell is under a great deal of regulatory scrutiny these days for illegal short sellling, and registrations on their behalf are not getting approved. That is just rumor. It could take me a little more time to determine my position on this, but there is no imminent danger to the stock. They haven’t even filed the first ammendment yet.
“The holder is one of the most notorious aggressive selling funds out there.” Is this good or bad if I currently own the stock at a price of .28 ? What is you risk/reward assessment?
Editor: If you checked the archive section, you should have noted that my suggested stop loss is $.26. The stock has now hit that level. If you believe in stop losses and you want to take the emotion out of it, just sell it. It could go right back up. However, a wise man once said ideas are plentiful, capital is scarce. Anyone can handle a 2 cent loss. No big deal. However, if this thing gets killed and drops to $.10 then it really hurts. I don’t know what is going to happen. I just know if you have discipline and don’t second guess yourself you will come out ahead in the long term.
Hi, What about an update on this…why is this stock going down on news of some new contracts?
Editor: The stock has now hit my suggested stop loss. If you believe in stop losses, you should simply sell it.
Let’s say the rumor about Cornell is true. How will it affect TLPE.
Editor: The stock will get hammered.
I am a 3 to 5 year investor on any stocks I purchase. Do you think it is worth keeping TLPE for that time. If YES I would like to pick up more shares as the price is dropping, but would like some speculation on how low it might go based on recent events (Cornell)
Editor: In my opinion, if Cornell begins selling their stock, I would not hold it. This financing could become a death spiral. As I said, I need more time to look into it. If they are allowed to refinance the company and simply pay the money back at some point down the road, a 3 to 5 year time horizon would work.
As you may know TLPE came out with pre-!st Q numbers. I’d like to know if these numbers warrant a rise in the stock price and what might be a fair value with considerations that it is a relatively riskier penny stock? Also, how would you assess the present value at .27 ? Where do you think this stock going in the short term and why ? Mark
Editor: That’s the tough question- are there 80 million share I&O, or nearly 1/2 billion and the company debt free. The registration statement of nearly 300 million shares to the debt holders changed everything on this deal. I believe there is upside off current levels if they just keep the debt and pay the interest. It the debt is converted to stock, forget it. I haven’t had time to tear apart the Sb2 filing and figure out which way it is going to go. For the time being, the stock seems to be stuck in the mud regardless of corporate performance because the market is very concerned about the dilution. In my view, this stock should be sold on the little surges it makes into the mid $.30′s.