Pulse Seismic (PSD.TO)

Market cap is $180M, after a 61% gain this year so far. No analyst coverage. Dividend 1.96% with a 17% bump in April and semi-regular special dividends. Price/earnings 13X. No debt and $14M cash. Good cash flow. A big jump in last quarter revenue and a share buyback in place. A recent large contract win. Insiders at 3% ownership but 57% tightly held. There is a lot to like here for small cap investors. As a seismic data licensing firm it is tied to the oil and gas sector, but its library has value and can be sold more than once. Financial ratios are good. We think it is quite interesting right now, even considering the recent gains.
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A small cap. Can't buy it because there's not enough volume for him to analyse. It's breaking down after holding up during market problems. If it holds above $3, that's great, but it may decline below $2.80. It's starting to come down. Be careful here. Next support level is $2.60 which is your exit point.

Has been on his radar for a long time. Never bought them, because the stock has never moved over the long-term. They do some sort of imaging of a terrain, an area of demand for people in the oil industry. With the resource sector being weak, their stock has been weak. Has a relatively high ROE, that hasn’t translated into earnings growth in the last little while. He wouldn’t have a problem owning this because of their nice ROE profile.

(A Top Pick March 18/14. Up 2.87%.) If you are a big oil company in Calgary that is cutting back on production and have capital in hand, what you are going to do? You are going to buy assets and to do this you need data. Has a high return on equity. Has been adding to this in the last few days.

(A Top Pick Dec 24/13. Down 20.7%.) Financial performance has been good, but just got hit with the rest of the natural resource stocks. A disappointment, but he is holding. Even though the share price is not going up, the net worth of the business is growing from year to year. He’ll just be patient.

Like a lot of the energy stuff, the stock is not performing well, but the earnings are strong. There has been a recent upwards revision. There are great cash flows in the business. He believes this one will eventually come good.

Thinks this is still very undervalued. He is waiting. Randomly they get orders for seismic data, and the stock will move very, very rapidly. It is in the doghouse and is going to take some time.

Great company. A long-term play. If you look at the last 6 months, the share price has done terrible, but it also creates an opportunity. Last year they generated $37 million of cash flow, so there is a lot of cash flow coming from the company. This correction is one that he feels people have been waiting for. Doesn’t know what kind of a year 2014-2015 will be, but last year was an incredibly quiet year and it is hard to imagine it will stay that quiet. Trading at around 5X earnings right now. You’ll have to be patient with it.

Seismic is a tough business. You get paid to go out to shoot the data, store it in the library and then new technology comes along and people are not interested in paying you again and again. Stock has done pretty well in the past year. Thinks there is upside in the next year as he is very bullish on exploration in Northeast BC. Feels there are other ways to play this.

Are going to buy back stock with 50% of next year’s earnings. Can’t believe someone isn’t trying to take them out. 1.88% yield.

Basically they run a library. When things are good, as they are now, there is demand for their data. It’s a cash machine in good times. Well run. High margins.

Their seismic data library is of great advantage for the Western sedimentary basin. Making money and is a very significant free cash flow generator. Using the cash flow to pay down debt. Q3 should be quite good. Trading at about 13.9X price earnings multiple based on 2013. Attractive.

Doesn’t own but is going to try and accumulate under $2.70 over a period of time. Went through a transition a couple of years ago with an acquisition so it has been a transformation for them.