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In
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Investors
heard some interesting news from Eagle Ventures International today
...not necessarily good or bad, but interesting. If you're a shareholder
(or
potential shareholder), you'll want to check it out.
Also in this
edition we'll revisit the Clearly Canadian chart. The stock that
started out as a whim on February
15th has turned into something a little more serious.
And finally,
is
Spicy Pickle establishing a base at 92 cents? That was the low
from the 4th, and has been the floor for the last three trading days as
well.
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Eagle
Ventures Adjusts 2007 Guidance |
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Though the fiscal
year is already over, we haven't actually heard the official (i.e. audited)
results
from 2007 for Eagle Ventures Intl. (EGVI.PK).
The
last reported 2007 estimate we had from the company was sales in the area
of $40 million, but today the company stated the figure is being lowered
to something in the neighborhood of $30 million.
The cash flow
didn't change or come in lower than anticipated...the top line is taking
a hit mostly due to major write-downs stemming from cost-cutting measures
in Q4.
In the latter
half of last year the company decided to make less use of third-party service
vendors, and instead handle more of those tasks internally. The
eventual benefit could be an operating cost reduction of up to 60%. However,
the
transition wasn't free. The write-down should be a one-time event
though.
The full details
are in the press release below, but there are two observations we made
in the wake of the announcement.
 First,
we know Eagle was in the middle of an audit - a prerequisite for
the pending bulletin board listing they've been working on. The company
has been forthcoming in that light, incurring the expense of an audit in
2006 as well as 2007. Perhaps an auditor suggested a change that created
a write-down now, but would avoid a bigger one later.
By the same
token, it was only three days ago the company
hired their first Chief Financial Officer...Paul Peterson, who has
an impressive array of experience. Maybe the hiring of Peterson
was related to the audit and write-down; maybe not. The timing of the announcements,
though, suggests Eagle is getting serious about its books.
The second
observation...this
doesn't really change much in terms of what Eagle's shares should be
worth a year from now.
 Had
it not been for the write-down, Eagle would have indeed created revenues
somewhere near $40 million. Accounting technicalities may end up blurring
the bigger 2007 picture, but the company still expects to do about $50
million in revenue for 2008, and more than twice that in 2009.
Eagle also started
producing a positive EBITDA in 2006, which should grow incrementally each
year the top line grows.
For comparison's
sake, with shares at 47 cents the current market cap is right around $35
million. As such, even by 2007's post-write-down results the company remains
a relative bargain in our view.
How so?
Aside from a positive EBITDA figure, the average price/sales ratio for
telecom service providers is 1.41; Eagle's is 1.16, even with the 2007
write-down. If they do their projected $50 million (a low-end estimate)
in revenues for 2008, the price/sales ratio will be 0.7 based on the current
trading level of 47 cents..
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Clearly
Canadian 'In The Zone' |
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Though the stock's
strength has tapered the last couple of weeks, Clearly Canadian (OTCBB:
CCBEF) has been shielded from the slaughter most other stocks have
experienced since then.
 After
the heroic move to 92 cents on the 26th, CCBEF has been traveling sideways.
The 'zone' has spanned mostly from 87 cents to 95 cents.
Many traders
would consider this sideways a motion a consolidation phase ...a
rest period for a stock that's been moving quite a bit. It's a natural
and common occurrence, allowing a stock and its followers to catch up with
the new trading level. Eventually, the stock will break free of
this horizontal zone - hopefully the upper edge of it.
We're willing
to give the stock a breather for now. Current owners just don't want to
see a move well under 87 cents. Fortunately the 10 day average seems to
be playing a support role.
 Speaking
of support, is Spicy Pickle (OTCBB:
SPKL) defining a floor of its own?
We saw a low
of 92 cents on the day the previous support level (of $1.11) broke down.
Yet,
we haven't seen SPKL move under 92 cents...even after a few attempts
to do so this week. Have the buyers drawn their line in the sand?
Like CCBEF's
chart, for the time being this should be considered nothing other than
a consolidation phase. The important event most traders are looking for
is a break under 92 cents, or above $1.01.
Look for a special
'Making
Sense of the Market' edition soon. The last few days have been wild
for stocks to say the least - perhaps a reason to sit things out
and let the dust settle. With the initial fear and volatility dissipating
though, we can start to tip-toe back into the game. Look for some new data
charts - and updates of old ones - as we solidify a game plan.
Here's the Eagle
Ventures press release.
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Eagle
Ventures International Projects 2008 Growth
EAGLE, Idaho,
March 13 /PRNewswire-FirstCall/ -- (Pink Sheets: EGVI.PK)
Eagle Ventures International, Inc. ("the Company") is a holding company
parent to various subsidiaries, including TelExtreme International, Inc.
During its first full year of operations in 2005, TelExtreme generated
approximately $3.4 million in sales. By the end of the year 2006, revenues
grew dramatically to approximately $30 million, which generated approximately
$2.7 million in EBITDA.
In order to continue
this monumental rate of rapid sales growth, in the third and fourth quarters
of 2007 the Company focused on migrating services from third party vendors
to reduce their operating costs by nearly 60% on a forward-going basis.
While these strategic actions are believed to have long-term benefits,
the Company currently plans to take a 4th quarter write down that will
adversely impact revenue figures for last year's operating performance.
Specifically, the Company had previously projected its 2007 sales to be
in the $40 million range, however at this time the Company projects 2007
revenues will come in approximately equal to the year 2006, at about $30
million.
The Company expects
that its audited financials for the year 2007 will be completed by the
end of April 2008. With a recent share price of $0.55, the Company is currently
trading at a market capitalization of about $42 million, or less than 1X
projected 2008 revenues. For 2008, the Company is projecting revenues of
approximately $50 million, with the anticipated growth largely coming from
TelExtreme's expansion into the U.S. market and from having implemented
through the 4th quarter of 2008 and the 1st quarter of 2008 their plans
to increase operating efficiencies. Ramp up for increased marketing and
expanding into new markets will begin in earnest in the second quarter
of 2008.
Regarding their
recent entry into the U.S. Voice over IP market, TelExtreme's President
Tim Langston recently commented, "We are excited about our entry into the
U.S. market where, according to independent research, VoIP is expected
to expand to upwards of 12% of the U.S. population by 2009. Our marketing
model is all about increasing the public's awareness of how our service
can benefit every new VoIP user. TelExtreme is poised to take full advantage
of the tremendous growth of VoIP customers in the U.S. and other high growth
markets abroad in 2008, and beyond. We are pleased to be the current main
source of revenue and revenue growth for our parent company Eagle Ventures
International."
Forward Looking
Statements
This press release
contains forward-looking statements regarding the future results and performance
of Eagle Ventures International, Inc. and its subsidiaries, including statements
regarding revenue, growth and market development. These forward-looking
statements involve risks and uncertainties and actual results could differ
materially from those predicted in any such forward-looking statements.
Except for historical information, all of the statements, expectations
and assumptions contained in the foregoing are forward-looking statements.
The realization of any or all of these expectations is subject to a number
of risks and uncertainties and it is possible that the assumptions made
by management may not materialize. Statements in this press release may
involve risks and uncertainties; actual results may differ from the forward-looking
statements. Sentences or phrases that use such words as "believes," "anticipates,"
"plans," "may," "hopes," "can," "will," "expects," "is designed to," "with
the intent," "potential" and others indicate forward-looking statements,
but their absence does not mean that a statement is not forward-looking.
The Company undertakes no obligation to publicly release any revisions
to forward-looking statements.
Source: Eagle
Ventures International, Inc. |
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Purple
Beverage Co. Creating Some Green For Investors...For Now |
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the last few weeks we've become intimately aware of small cap company Clearly
Canadian's revival. Perhaps birds of a feather really do flock together...micro
cap stock Purple Beverage Company (PPBV)
has been on fire lately, more than doubling its value since early February.
As hot as this new stock is, it just seems to be getting hotter. One could
make the argument that Clearly Canadian and Purple Beverage were just beneficiaries
of the bigger uptrend within the soft drink sector, but that wouldn't be
the case - soft drinks have just been mediocre over the last six weeks.
No, these two names are doing most of the work on their own.
Just
for perspective, since February 1st:
* Clearly
Canadian shares are up 56.9%
*
Purple Beverage shares are up 103.4%
*
The Dow Jones Soft Drink Index is up 0.5%
There's
not much 'groupthink' evident in that disparity. The Clearly Canadian strength
we've already discussed - more good news, and more reporting of it. The
reason for Purple Beverage stock's strength is a little hazier.
The
company was born out of a union completed in December between Venture Beverage
company and Red Carpet Entertainment. The ticker 'PPBV' went live on the
bulletin board in January, and has been smokin' ever since.
Is
it worth the current price of $3.15? That's the question. To answer it,
we have to go back to the quarterly reports files before the new name and
ticker became effective. In the last quarter of last year, they did $258.8K
in sales. Since it was basically the first operational quarter, there is
no comparative...nor even a helpful forecast.
The
market cap? About $170 million. That's not even in the right universe relative
to the dollar amount of sales the company did last quarter.
To
maintain anything close to its current stock price, Purple Beverage is
going to have to do something uncanny to the top line (and that's an understatement)
in the very near future. Maybe they have it up their sleeve, though even
all the recent media exposure they've gotten - which has been great - won't
put dollars on the table.
Caution
is merited for long-term investors, though short-term traders may be able
to ride some of the hype-driven rally. Either way, it's going to be an
interesting company to watch. |
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Updated: 3:10 pm PST (23:10 GMT), November 20, 2008
