Optimal Group, Inc. (NASDAQ:OPMR)

Chemistryguy (< 20) Submitted: 12/21/2007 11:12:27 AM : Start Price: $3.88 OPMR Score: -31.89

The gambling ban seems to half cut OPMRs sales in half, so assuming that their book value has been cut in half as well (which can be an overestimate due to a large amount of cash OPMR had at the time or a conservative estimate based on the profitability of the gambling unit) it leaves us with a Price/Book of .86. Though their annualized return on equity has not been great for a business service or toy company (they are really a mix of both now with the acquisition of WowWee) at 5.8% over the last 5 years and worse before that, they seem to have made a lot of money selling parts of the company, which still counts the same though it may not be reflected in return on equity. Just looking at it as a business service company, the business services industry has increased its return on equity to 25.8% from a 5 year average of 17.0%, and toy companies have increased their ROE to 24.0% from a 5 year average of 21.1%. If OPMR can get the return on equity of its peers, it would outperform them by between 400%-500% given my assumption as to its current Price/Book. That is a screaming deal.