Analysis on Demand

[Bishop]

Hi David,

ORB. What is your take on this stock? I'm in it. Thanks in advance.

[babouk]

Hi David, could you cover uranium company CCJ - chart seems to be very bullish. Tanks

[David Randolph]

David...please take a look at ILC...I think you will like what you see once you dig into a bit. This is a ground-floor opportunity IMO.

Ok, let me take a brief look at ILC. First of all let me say I like the sector, it is software, it is internet and has to do with people starting to work from home like I do. Unfortunately this is a simplistic way to look at things, not always a good macro environment or idea means an attractive company to invest.

First of all, let me see the chart:



I see a double top at $0.81 followed by a sharp fall in point number 1. What happened on that day? The news was:

• iLinc Announces Preliminary Unaudited Fiscal Year 2007 and Fourth Quarter Results
PR Newswire (Thu, May 3)

15% revenue growth YoY for fiscal 2007 but just 3% growth in Q4 2007 when compared to Q4 2006. People didn't like that.

Then on point 2 the stock rebounded strongly, and the news on those days were:

• iLinc to Present at the RedChip Small-Cap Conference
PR Newswire (Fri, May 18)

Ok, it had to do with the conference you posted, which I've listened to.

Let me make a quick round for the fundamentals and apply my valuation model to ILC:

1) Dilution factor

ILC has an history of dilution, the share count rose from 6.4 million shares in 1998 to 33.4 million now. Balance sheet is quite weak, since the current ratio is 1.14, there are $7 M in long term debt and about $1.5 M in cash and marketable securities.

The share count CAGR since 1998 was 20%. The dilution factor I'll put in my valuation model will be 1.2.

2) Revenue CAGR

Revenue in 2004 was $5 M, and the company expects $14.4 M for fiscal 2007. The revenue CAGR is 42.28%. However, revenues in Q4 grew just 3% from the year ago levels. Let's be optimistic and consider revenue growth going forward will be 25%. Revenue CAGR estimate is therefore 1.25.

3) Net profit margin estimate

The company lost money in 2003, 2004, 2005 and 2006. Net income was slightly positive for the past three quarters. The company has a net profit margin of 2.4%. Let's be enthusiastic and consider the net profit margin will expand to 5% over the medium term.

4) EPS multiple estimate

Here, as usual, I'll use the industry average which in ILC's case (Application Software industry) is 33.17.

Computing ...



Unless the company exceeds these estimates by a lot, the stock is not attractive, since the share price is estimated to be at $0.81 three years from now. It depends a lot on net profit margin, but because the company has this history of losses and dilution, coupled with a weak balance sheet, I would say that with the currently publicly available information an investment in ILC is too risky.

Can be wrong though, good luck

[David Randolph]

Hi David.
pls take a look at TSEM.

it's a good company that made a big turnaround in the last couple of years.
i'd invested in TSEM in the past, i think that now the stock is looking to be pretty cheap.

i would like to hear your appinion about TSEM's future.

Thanks,
Avivwiz

Hi Avivwiz, I can only speculate about the future, hopefully with some basis. Let me see ... TSEM is a $215 M market cap. It keeps diluting shareholder's value, and that partially explains its long term decline:



The company lost money every year for the past 8 years and with $187 M in revenues in 2006 it still lost $86 M.

There's no basis for me to apply the valuation model to this company. It had to have a dramatic fundamental turnaround to start being attractive. With the current fundamental information I would avoid TSEM.

Can be wrong though, good luck if you own it

[nicknite20]

David,
Could you pls relook at MCZ?
Thanks,
Nick

34% return since i got into MCZ last week...

lets work on a double baby

[nicknite20]

Hi David,
LAYN is once again in the spotlight..been added to the IBD top 100 list over the weekend.
I'm holding a position in LAYN..i think its a nice safe stock for the long run. 

They report earnings on 31st.


http://www.3stocksonfire.org/trading/index.php?topic=9240.0

LAYN moved up to #66 on this weekend's list from #95 !!!

[Terliso]

David,
Could you pls relook at MCZ?
Thanks,
Nick

34% return since i got into MCZ last week...

lets work on a double baby

Nice going Nicknite, I see this one can go up to $1.75

[rickjust]

hi,
i got in this one at 108 and 124 . i can see an earnings run. they report on june 5th.
nice volume on friday afternoon before a long weekend,
also cfpc broke through the 180 barrier.
max

[nicknite20]

terliso,
the earnings on 5th June is key for MCZ..looks like it will settle in the 1.50s - 1.60s be4 that..
Nick

[buddjas1]

David,  ELP just upgraded today.  May want to take a look at it.

[nicknite20]

David,
Can you pls. take a look at ASIA?
Looks interesting..

They have cash per share of 3.5..so the market is valuing the business at less than 20 p/e. Seems a disparity for the revenue / earnings growth last qtr.

http://finance.yahoo.com/q/is?s=asia

Appreciate your thoughts.
Nick

[David Randolph]

Hi guys, I'm sorry for not being able to keep up with the requests on this thread. I'm going to start making shorter video analysis and disregard those financial charts that take a lot of time to do.

I have 13 stocks to cover here, which are: ICOC, NVEC, PRM, ACRI, ABIX, URZ, PZZ, IOM, ORB, CCJ, MCZ, ELP and ASIA.

I'll try to cover them over the next few days, in the meantime let me close this thread to new posts until I catch up.

Anyway, starting today, we'll have one of those daily threads at www.stocksonvideo.com and I expect to cover some more new stocks there on your request.

Thanks

[David Randolph]

I have 13 stocks to cover here, which are: ICOC, NVEC, PRM, ACRI, ABIX, URZ, PZZ, IOM, ORB, CCJ, MCZ, ELP and ASIA.

I'm going to make these analysis at www.stocksonvideo.com. Obviously I already made ICOC, so NVEC is next.