Stockchase Opinions

Malvin Spooner Axia NetMedia AXX-T DON'T BUY Jan 31, 2002

Getting a little expensive.
$1.850

Stock price when the opinion was issued

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DON'T BUY
Ranks in the bottom 10%. Just reported earnings and estimates have been cranked down by 30% in the last 90 days. Earnings are expected to decline from $0.28 to $0.16. One of their challenges is they are running into the taxman. Have had tax loss carry forward for a long time and then they get hit with a 30% tax.
BUY
Runs a super network in Alberta. A couple of reasons the stock has dropped. It probably ran up a little too far. Some of their bids for acquisitions and France have not worked out and there was some confusion about Australia.
BUY
Bit of a telecom play as well as a infrastructure play. Built a fibre-optic IP network in Alberta called the SuperNet with a 10-year guaranteed Alberta government contract. Guarantees $38 million in revenue per year and they can also do some other value added services and resell to other people which generates about $.25 to $.30 in earnings. Have also gone into areas where services are needed for rural fibre optic solutions. Also looking into Australia and Singapore. Has been oversold.
PAST TOP PICK
(A Top Pick March 23/07. Down 55%.) Communication systems. A lot of expectations on them landing contracts. Did get some in France and Alberta. A tremendous little company.
PAST TOP PICK
(A Top Pick Mar 23/07. Down 51%.) The market retreated and small caps got hit. People get impatient because they are not turning on new contracts in Singapore/Australia. There is no reason why they can't get these in the future. The company is in fine shape. He would absolutely Buy it today.
HOLD
Provides broadband infrastructure. Main market is Alberta and with lower oil prices, the economy is slowing. Until Alberta improves or they expand their international operations the stock will be a bit of a laggard.
STRONG BUY
Rural Internet provider. Doesn't understand why it has been neglected. Continues to perform well and looks like they will have great opportunities for growth in Australia. Building Singapore network right now. Strong presence in Alberta. Cash flows are ramping. $35 million in cash.
DON'T BUY
Earnings estimates were $0.04 in June and $0.08 in June/11 but June/12 is forecasted to decline to $0.02. Have about $34 million in cash on the balance sheet. 42X PE in 2012. Cheap and is producing a 4th quarter trailing cash flow yield of 4%. Not sure they can be profitable.
TOP PICK

Tied to the insatiable demand for band width. Over a 20 year period has about $1.2 billion worth of fiber in the ground, mostly in rural areas with governments being their largest customers. You are not paying for it as they have almost 60% of their market cap in networking capital, between cash and receivables, mostly cash. He is expecting a very large special dividend, possibly in the range of $0.50 a share as well as a continued buy back of the stock. Thinks $3 is pretty easy on the upside.

PAST TOP PICK

(A Top Pick Dec 27/13. Up 31.82%.) Has a unique business model, where they typically serve rural markets, and have done quite well. In the last year, they sold off their businesses in Singapore and in Spain, so have about $45 million in cash, so they have a lot of firepower to fund growth in other areas. Has been trimming this a little lately.