GuestLogix (GXI.TO)

This seems to be a case of overpromising and underdelivering. However, they have had 9 quarters in a row of revenue growth. Just made a transaction where they bought Openjaw. This does off board transactions, such as when you finish booking your ticket, at the very end it says “Do you want to book a rental car, hotel, etc.”. Airlines are starting to see massive amounts of revenue from that. This will allow them to cross sell and really ramp up their business. Trading at ridiculously cheap multiples, less than 1X sales.

(Top Pick Apr 21/14, Down 37.98%) They announced a bunch of contracts for global new deployments and some of them have now been pushed out and margins on renewing contracts are lower than the street had forecast. He has almost no position left.

Near the bottom of his database. The market expected a 4 cent loss last year. It is a recurring revenue model with devices in airlines and trains. New management is turning the company around and he thinks it is now an opportunity if they can hit the numbers.

Never been a fan of this company. They did a refinancing and he was not a big fan of them. He stayed away. Thinks an activist shareholder has come in.

A transaction processor and the backbone behind whoever is providing the service. One of the new growth drivers for them are the screens that you see on the back of plane seats. Airlines are going to start charging for these features, and this company will process all those transactions. This is where airlines are making their money, so he thinks this will continue to grow. CEO has cut back on some of the R&D and wants to become more commercial oriented in order to filter some of the top line growth down to the bottom line. Be patient.

This has been a tough one. It’s a company that he owns and has liked in the past. They are rolling out, through their partners Thales and Panasonic, seatback payment processing systems on airplanes, in addition to off-board initiatives with NCR as a partner. What is happening is that airlines are taking a lot longer than he suspected and were led to believe, to switch on the new payment processing systems and train staff to use the new system. This is a big recurring revenue model. They just did a merger with Open Jaw that will give them some more scale and some cross-selling opportunities, particularly in Europe. Did a recent financing to fund that. Unfortunately, the financing did not go well, so it is probably going to be dead money for a while. Still likes it fundamentally and its valuation. Over a two-year period, he thinks the stock goes a lot higher. Over the next 2-3 months, it is dead money.

Provide the hardware for airlines for people buying things on airplanes. Hasn’t done much in the last 2-3 years. His problem is that they never really delivered on what they said they would. They continue to sign more deals, but it hasn’t fallen to the bottom line.

Technology for selling goods on airlines including the payment transactions. There is a lot of talk of them winning a lot of new contracts, but they have not come as quickly as was thought they would. People just don’t want to be in smaller cap stocks.

Is Ebola scaring investors off? His view is that the Ebola crisis may have some short-term impact on airline and airline traffic, but this one is really a long-term play on ancillary revenues that airlines charge. He likes the stock, it is a long-term structural story. The street is waiting to see what the next couple of quarters looks like. A great story.

Airlines are their biggest customers, whose stocks are down due to the Ebola virus. They have 80% market share. They have had 20 new deployments this year. He does not expect a major uptick this quarter, but next quarter and into next year. Revenues could be up 40%.

Point of sale terminals for airlines and trains. An airline/train will process your payment through a credit card and this goes through this company, which gets a small piece of each transaction. A good business.

In the business basically of payment processing. Have a large market share of most of the North American airlines and globally. Every time you use your credit card to buy something on the airlines, they get a tiny piece. Have had 6 quarters in a row of record revenue. They are starting to see the EBITDA drop to the bottom line and we will start to see earnings drop to the bottom line. Street is getting a little uneasy and wants things to happen a little faster. We are going to see a blowout quarter either this quarter or next; it is just a matter of when. This is going to get a valuation bump.

History of over promising and under delivering. Does not like the earnings profile and cash flows. Never hit on where they say they will.

Owns this in his growth funds. Has technologies that allow the airlines to process extra payments. Have signed a couple of big contracts with 2 big airline seat manufacturers. He has been waiting for them to actually get them into the airplanes, and at that point in time there will be some revenue. Looking for a big blowout quarter, either this quarter or the next. If they miss their numbers this quarter, there will be a lot of critical eyes, but he thinks this is just a delay.

Really surprised this stock is not a lot higher already. They’ve announced they have 22 deployments. They are going to double the size of EBITDA and revenues over the next year. Trading at only 10X forward earnings, and he thinks it will keep this valuation, if not expand it, as they grow the earnings and double it over the next 12-18 months. The bottleneck in buying things on airplanes is waiting for the flight attendant to process everything. This is easily a $2 stock, and could be $3 on a takeout basis.