Espial Group (ESP.TO)

This is really gaining traction. They have software that goes into set-top boxes for cable TVs. There has been cord cutting and people have gone to Apple TVs and 3rd-party suppliers. This company’s software can be embedded into those to give it a more friendly user look and to be able to surf the Internet, go on YouTube, etc. Their market is expanding. He thinks there are probably a lot of bigger telcos and cable companies that are watching to see what happens with these rollouts. They are just turning into the profitable state right now.

$133 million market cap and $48 million in cash. For a tech company to have a 2% free cash flow yield, it is a good thing. They make a TV browser which is based on HTML5. 2 years ago they announced a multimillion dollar multiyear contract with an unnamed tier 1 cable operator in North America. This will be used for set-top boxes as well as tablets and cell phones. The rumour is that it is Rogers. The product is expected to be launched between now and the end of the year.

A value name in the tech sector. About 40% of their market cap is in cash. You are going to see revenues move up next year. There is very good growth here.

This company’s software can be put into a set-top box giving a lot of the extended features that people have become accustomed to. With all the “cord cutting” going on, cable companies are really looking for solutions to try to keep their customers, and this is a company that has that solution. Rogers (RCI.B-T) is one of their customers. Stock is super cheap. There is $1.70 in share price that is just cash. Trading at really low multiples.

(A Top Pick July 30/14. Up 5.59%.) The earnings growth is going to come through. Has been a very volatile stock. At the end of last year, they didn’t end up signing a contract that people thought they were going to sign, but got it 2 weeks later, and the stock had a big run up. Every quarter revenues and margins have been better than he expected. The revenue base is not huge right now, but the deployment after these 3 signed contracts, is where you are going to start to see earnings lift over the next couple of years. A good entry point.

He talked about it 6 months ago. There was slippage in the signing of a contract from end of last year into the beginning of this year. Earnings coming out this Thursday and should be good.

They try to help cable providers beat some of the companies, such as Netflix. Have signed one large deal which he thinks is going to be deployed later on in the year. Stock has come off quite a bit in the last number of months. Feels half the market cap is in cash, and there will be some deployment coming in the back half or early part of 2015. Earnings are about to start to come through. Have done fairly well operationally. Surprised on the upside each quarter for the last three quarters. People were expecting them to sign another deal before year-end, but that was pushed out so the stock has come off for the moment.

Just signed with a tier one communications company. Cable companies are losing a lot of business to Netflix. Are going to try to enhance the cable experience to subscribers.