Give me 3 Stocks

[jerom]

PRGX

thx,
Jerom.

[David Randolph]

will there be an ONT analysis today?

Yes La-onda, I'm working on that now.

Hey guys, it's not worth it to put more tickers on this thread (or I would never be able to keep up with the requests), just the 3 first tickers after I post a new "Give me 3 Stocks" thread will be analyzed.

I'll put the new thread at 7 pm ET.

ONT analysis will still be posted on this thread and before 7 pm I'll move it to the Members Corner and start a new one, understood?

Thanks for your participation

[David Randolph]

1. Profile

On2 Technologies, Inc. (ONT) operates as a video compression technology firm. It develops a proprietary technology platform and video compression/decompression (codec) software to deliver video to closed area networks, such as set-top boxes, Internet, and wireless devices.(complete profile here)

2. Technical Analysis
2.1. All History Chart



ONT is one of those dead corps of the tech bubble debacle. I tend to like this kind of stocks now that a new bull market in technology is unfolding.

2.2. Medium Term Chart



I see a pattern of higher lows and higher highs since 2005. Also there was a golden cross about a month ago (the 50 days moving average crossed above the 200 days SMA).

2.3. Short Term Chart



The short term trend is bullish. I sure like the technical picture, let's check the fundamentals.

3. Fundamental Analysis
3.1. Number of Shares Outstanding



This company has been living from issuing and selling shares. I see heavy dilution not just every year, but every month. A bit less dilution in 2006, though.

The current market cap is 101,199,303*$1.09 = $110.3 M.

3.2. Liquidity



The current ratio stands at 5.24, the company doesn't have a short term liquidity problem, with about $4.6 M in cash.

3.3. Revenues



Revenues were incipient until 2005. But in 2006 they're growing quite strongly from 2005 levels as you can see on the graph above. I can clearly see revenues increasing even on a quarter by quarter basis. For Q1 I have $1.217 M, for Q2 $1.535 M and for Q3 2006 I have $1.703 M. If ONT makes, say, $1.9 M in revs in the 4th quarter, it will show full year revenues of $6.355 M.

Still, the revenue multiple would be an excessive $110.3 M/$6.355 M = 17. Excessive? It depends on the gross and net profit margins.

I see, for DIVX gross margin is 92% and net profit margin is 20%. This is very high. By the way, DIVX's revenue multiple is 15.

3.4. Profits



The company lost big bucks over the last seven years.

4. General Overview

I can understand the recent tick up in the stock, revenues are growing a lot from a very small base. DIVX is the leader in this video compression industry and probably ONT is its closest competitor.

These two companies are still so small in revenue terms. But their gross and net income margins (well, ONT is still losing money) perhaps justify the extremely high revenue multiples.

They look like a biotech or software wonder.

You have to believe the online video mania to buy ONT. Do I believe video will be the way of communication of the future? I do.

Damn it, I should have made this analysis earlier, the stock is up 12% today

Despite all the financial problems this company had, the market always looks to the future, and $110 M doesn't look like a very high price to pay to be involved in the current "go video" global trend. Also, the quarterly tick up in revenues might be saying ONT's time is arriving.

Good luck

[Rmagos]

Hi David
Once congratulations for your wonderful job and the way you are teaching us this business
I wonder if you can post a technical analysis of the "XAU" or some of the gold stocks like AUY,HL, KGC,SLW
Thank you

[cumulina]

FPP 

As I'm really, really bad at evaluating the finances of companies, I'd really appreciate an opinion on this little oil/gas company.

News was out today:

FieldPoint Petroleum Announces Acquisition; Shrs Up 15.6%
Dow Jones Newswires - December 28, 2006 2:08 PM ET

Related Quotes
Symbol         Last    Chg
FPP    Trade    2.29    +0.24
Real time quote.

DOW JONES NEWSWIRES

FieldPoint Petroleum Corp. (FPP) is acquiring a working interest in the Bilbrey Field in Lea County, N.M., for $1.67 million.

FieldPoint shares recently traded at $2.37, up 32 cents, or 15.6%.

The Austin, Texas, company said the deal is expected to add about 108,000 net barrels of oil equivalent, which would replace more than 100% of the company's 2006 production.

I must admit that I've owned it a long time, and it has been - eh, shall we say...difficult!

Thanks.

[dnickers]

Hey guys - We need to make sure we read at least part of each thread to get an idea about what's taking place here.  I'm sure David is getting tired of reminding everybody that he's taking the first three tickers posted AFTER he makes the "Ok, now" post around 7pm. 

David - maybe changing the subject to something like: Give me (only) 3 Stocks / or Give me 3 Stocks at 7pm would make it more clear.

dNick