New idea TLPE is out to a strong start for OTC Journal subscribers. I covered the stock for the first time about 10 days ago at $.23 as the company announced very strong Q3 numbers and the first cash flow positive quarter in its history.
Yesterday, TLPE delivered more strong news for market participants. The company achieved $2 million in revenues in November, with over 5400 customers contributing to their success. This is up by 500 customers as of the end of September. We can conclude organic growth on an annualized basis is strong.
Taking into account the next strategic acquisition sheduled for later this month, it would appear the recent analyst’s report which pegs the annual run rate at about $37 million has a real basis in reality.
In the meantime, technically this stock looks great.
As you can see from the blue line, the stock spiked last summer. The subsequent sell off was met with a rebound, which is where the downtrend began.
The pattern of lower highs and lower lows continued until just recently. Just this past week the stock broke above it’s downtrend line and held, confirming that the stock is now definately in an uptrend.
Further evidence of a trend reversal surrounds the stock’s behavior since the quarterly numbers were released. On the release the stock immediately traded from $.23 to $.27, and then turned around and made a pre Q3 news low of around $.22. This would suggest there were sellers waiting for the news who wanted to offload postions.
The stock immediately changed course, and in a few days rose back above the high set on the Q3 release. This suggests sellers are now scant, and more buy side volume will take this stock higher.
With a couple of positive events a short term target of $.35 is not unrealistic. This is a numbers story, and the numbers keep getting better.
Your comments and questions are welcome.
Is Teleplus the next Verizon or Cingular. If yes how long will it take for Teleplus to reach their level.
Editor: Teleplus will never be a Verizon or Cingular. More likely, a company like Verizon would buy them out. I would say they would have to achieve the $100 million mark in sales to catch the attention of a company like Verizon. They are forecasting $55 million in ’06- so 2007 would be the earliest you could look for some event like that. More likely, they will continue buying other smaller companies to fuel their growth.
I’m always looking for a long-term investment, minimum 5 years, where do you put TLPE. Shorter, 1-3 years or longer?
Editor: To me, long term is at least a year- you want to own it long enough to get the long term capital gains tax rate when you sell. If the company continues to grow, you can continue to hold it. In reality, you simply want to be around long enough for the market to turn its attention back to telecom and inflate a bubble of value there. Sell it when it is fully valued then. If you can tell me when that will be, I will tell you what long term is. Value is the best protection against the downside, but the worst predictor of price movement.