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stocki711 (98.93)

TCX - 2 cows or Tucows Inc

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September 17, 2009 – Comments (2) | RELATED TICKERS: ACY , TCX , GHM

I had incredible success with ACY even after a 12% selloff. A streak of 4 straight days of 10% gains (i missed the first one) had me up 44% in my ACY POS. But after today i sit up a comfterable 25% in a week. It is still my favorite stock at the moment and I see 100-200% runup over the next year to be fairly valued. With the growth of the company I think ACY could be a 5-bagger.

On to TCX

At $0.60 this stock I am sure scares many away but the price of the stock means nothing. It's all about balance sheets and income statements and this baby looks beautiful on paper.

 They are currently trading at  6.67 P/E of 12 trailing months.

The most recent month saw an eps of $0.07. That is  12% return in one quarter!

The next two quarters have eps estimates of $0.01 and $0.02 respectively giving a FY09 P/E of  5.5

They have been buying back shares and their outstanding shares have DECREASED by  5.5%

They have slightly over $4M in debt and $7.5M in cash with a market cap of $40M

Shareholder equity is currently $25M and has increased 16.5% in the first 6 months.

They generated 11% of their market cap in opperating cash (minus one time item)

That is, they took in $4.5M before expenses on a $40M market cap. That is 40%+ for the year!

I don't expect much growth but they are extremely undervalued.

I could see this company earning $0.10 to $0.16 FY2010 with a 10x P/E multiple for small cap with low growth. Price target of $1.00 immediately and $1.50 over the next year and a half.

Keep an eye on this company as a possible take over target for their cash generation. They generated $3.5M this past quarter after expenses. This will be the key to unlocking their value. If next quarter they can generate $2M or greater in after expenses cash then this company would be an extremely strong buy because they are retaining cash at a 15-25% annualized rate at this point

 

I currently own TCX and they represent 11% of my personal porfolio

 

2 Comments – Post Your Own

#1) On October 02, 2009 at 3:32 PM, Grapefest (< 20) wrote:

 

To own these as under-valued package is simply foolish. Those with in the know knowledge can and should tell you (as an investor) that they are a perperually losing proposition with a long history of mis-management and horrific technical gaffs. A company that has taken 12 years to right its ship is not under-valued, it's under water.

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#2) On November 06, 2009 at 11:23 AM, JimFuge (< 20) wrote:

stocki711, I couldn't agree with you more.  You probably have taken all the words out of my mouth, these are the arguments I've been making for Tucows for years now.  I've been long for about 5 years, you need patience for these small unknown gems.  They are a real company, real prospects, and I believe well managed.  Perhaps being on the AMEX is killing them as it appears more prone to MM manipulation.  Anyway, the other person has a fair argument but if you do truly look at them long term, slowly and a little painfully, they are going in the right direction.  I have personally spoken to Elliot Noss, CEO, and if I trust my gut, I like him.  I sense a sincere CEO (a rarity in this day) who truly cares about the company, its prospects and employees and a smart businessman who really knows his business.  He is equally frustrated with the price of course.  But like you said they did buy back a lot of shares already so they're making real moves, not just talking.  EPS will come in high, 10 cents or more, plus next year they may hit 100MM in sales bringing them to more notoriety, a new milestone.  This has to be one of the most undervalued stocks out there.  It is a steal.  Period.  Do your own DD. 

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