PeteZar (< 20)

TCX - The Forsaken Cow?

January 06, 2010 – Comments (1) | RELATED TICKERS: TCX

Tucows Inc. provides domain names, e-mail and other services to resellers through its reseller network and directly to consumers and small businesses through its retail and content groups. The Company is organized into four service and product related groups. The reseller services group manages over eight million domain names, millions of mailboxes and tens of thousands of digital certificates through a network of over 9,000 Web hosts, Internet service providers (ISPs), and other resellers worldwide. The retail services group offers these services to consumers and small businesses. Its domain portfolio group includes over 30,000 domains that are the basis of its personal names service that allows over two-thirds of Americans to purchase a domain or e-mail address based on their name. Its content group generates advertising revenue through tucows.com.

Tucows Inc. or TCX has sat under $1.50 for nearly 10 years, or since the end of 2000.Today it sits at a meager $.70 a share bouncing back from the low $.30's of March 2009.

 Since 2005 revenues have been increasing year over year from $48.5 million in 2005 to $78.5 million in 2008, and set to break $80 million in 2009. However, net income remained fairly unchanged through this time period sitting between $2 and $2.77 million. As a result, EPS remained stagnant during 2005-2008 with .04 EPS in 2005 and .03 EPS for 2006, 2007, and 2008.

 However, 2009 results stepped in to break this stagnation. So far this year TCX has reported EPS of $0.14 for the past 3 quarters. Q1 had EPS of .01, while Q2 had .06, and Q3 had .07. As mentioned before revenues are set to break $80 million and remember that net income of around $2 million for the past 4 years? Well TCX and 2009 trucked along and decided to more than double it to $5.05 million as of Q3 2009.

 All the while, TCX has been engaging in dutch auction tender offers and buying back shares through 2009. At the end of 2008 shares outstanding numbered 73.56 million and currently number 67.08 million. On Dec. 14'th, 2009 TCX announced another tender offer buy back for up to $5 million in shares.

The balance sheet of this company looks solid and it seems to have slipped under the radar as it currently trades on the AMEX. However, I think this is a great buy at this price especially with this company's recent performance.

StockScouter gives this stock a 10 out of 10.

I believe this is a stock worth looking into and doing some DD on if you wish to purchase.