Spicy Pickle's Pride of Ownership

You don't need us to tell you again today how the Spicy Pickle (OTCBB: SPKL) story has been a good one - we've been logging the company's progress for a few months now. Instead, with the main plot in motion, we can turn our attention to one of the developing side stories with a big impact on the bottom line as well as the top line.

Remember the financing completed back on December 16th? The purpose was to fund a few company-owned stores. Though ownership requires more effort than just franchising a restaurant, the owner also retains 100% of any profit. Thus, the attraction. 

Spicy Pickle raised a little under $6 million in the deal - enough to acquire somewhere between 12 and 15 units, in our estimate. They signed leases for two of these stores early this month...both in Colorado. Building new stores isn't the only option though. 

Per today's news release, the company has repurchased four of its previously franchised restaurants. Since these stores are already in operation, there's no downtime or lag in terms of generating real revenue. Additionally, considering the corporation is the resident expert on all Spicy Pickle matters, it's not like there's any kind of transitional learning curve. 

The news release didn't provide any of the fiscal details, but given the average unit does about $700K in sales each year, it wouldn't be unreasonable to guess these stores are also doing annual sales in the $700K area. So, the math here is fairly simple. We expect the company's top line to improve by about $2.8 million per year. However, since the stores are no longer franchises (and therefore don't pay royalties) the top line will be reduced by something near $200K. The net additional revenue works out to be something near $2.5 million, by our math. All those numbers are strictly estimates though. 

We don't have any word on the degree of profitability of these four stores. However, since the corporation decided to buy them, we can assume they're more profitable as owned stores instead of as franchises...or could be soon. So, we look for this to at least have some sort of positive impact on the bottom line. 

The stock is redefining the support area we talked about last time, at $1.10. The tune hasn't changed - that's the line in the sand. As long as it holds up, SPKL stays in the hunt for another bullish leg. 

The entire press release is below.
 

CCBEF Breaks Ceiling

Were you listening back on February 15th when we suggested Clearly Canadian (OTCBB: CCBEF) was a breakout candidate? We sure hope you were, because the stock is up 24% since then. Don't worry if you missed it - more of the same may be on the way. 

Like we said then, there was one key technical event still needed to act as a pseudo-clincher ...a move above 78 cents. That would carry shares past their January and February peaks, thus constituting a 'higher high' (the first one in a long time). Even thinking conservatively, Monday's high of 83 cents would have been a convincing bullish argument for almost any chart analyst. Tuesday's high of 95 cents and close of 92 cents could be considered overkill. 

So, we'll start the hypothetical clock at 80 cents for our unofficial trade. That's a realistic fill from Monday's trading. Potential targets we discussed were $1.48 (the next Fibonacci line), and $1.71 (the 200 day average line). Keep in mind we may or may not follow up on CCBEF at all; we just found it to be an interesting possibility and wanted to pass it along to you. Therefore, any target or stop should make sense solely for you. 

By the way, the catalyst was a changing of the guard. Bobby Genovese is the new CEO; former CEO Brent Lokash will now be heading up the beverage division. Lokash's immediate goal is to cultivate the drink market via new and existing partners, and expand the use of concentrated mixes as a means of delivery.

In our view it's not exactly a reason for a buying spree, but rather an excuse. On the other hand, sometimes all you need to get the ball rolling is a decent excuse. Clearly Canadian had been unduly beaten up for a while, and now it looks like the market has decided to at least try and correct the error. 
 

In Other News...

We haven't forgotten about Technical Communications (OTCBB: TCCO) - there just hasn't been much to talk about since we called the short-term top on the morning of February 12th. Shares ended up peaking at a high of $7.49 that day before closing at $7.36. You could have gotten out at a high of $7.40 the next day, but TCCO did indeed make good on the pullback we saw brewing. 

Unlike Clearly Canadian, our discussion of Technical Communications is neither an official or unofficial trade...at least not yet. We saw a break past $7.25 - one of the major items on our bullish punchlist - but a move to a high of $7.49 is hardly worth the effort. 

No, this is a bigger picture idea - especially considering how volatile the chart has been (and nearly impossible to 'trade'). Remember, our original mention of the stock was through a long-term investor's eyes. The growth trend here has been phenomenal - the short-term technicals may just help you find a better entry spot. 

With that in mind ...despite the pullback last week and recovery this week, we think TCCO has been volatile enough to merit waiting for a deeper dip than last week's. 

Here's the Spicy Pickle news... 
 

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Click Here or go to http://www.microcappress.com/disclosure/ to view our compensation on every company we have ever covered, or visit the following web address: http://www.microcappress.com/disclosure/reports_disclosure.php

The Managing Member of Pacific Shores Investments, LLC purchased 200,000 shares of Spicy Pickle at $.25 per share. This purchase was made in a Spicy Pickle private offering back in November of 2006. The Managing Member of Pacific Shores Investments, LLC has also purchased 50,000 shares of Spicy Pickle in the open market with an average cost basis of $.55 per share. Additionally, Pacific Shores Investments, LLC has been paid a fee of $30,000 cash and 250,000 shares of newly issued restricted stock by Spicy Pickle Franchising, Inc. for coverage of the Company.

From time to time PSI sells shares received as compensation for coverage of client companies. Shares received are sold in the open market. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, PSI does not view the sale of the shares as contradictory to any opinions delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies. 

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