There was a reverse takeover of MCTL by a private company out of Ontario,
California, named XIT. The combined and new MCTL has nothing to do with
what Microtel used to be before the takeover. In fact, XIT as it was
private grew at a compound rate of 30 to 40 % p.a. for the last 4 years
or so and is continuing to do so in the future. The XIT management,
which consists of highly experienced people coming from big Blue Chip
companies, have become the management of the new combined MCTL. They
have managed to turn around the old MCTL in just one quarter and are
experiencing high growth in their telecom testing equipment business,
due particularly to the Telecom Bill which allows long term carriers,
local telephone comps and cable operators to enter each ones business
without any obstacles. except for one: they have to invest in new
equiptment, which MCTL is a producer of. In fact, they just received a
contract by a Blue Chip company like ATT, and it's only the beginning.
This year's expected revs for the new MCTL are 60+ milion bucks with
EPS of around 25 cents (note, that includes a loss in the first quarter).
For next year, revs are expected to rise to 100+ milions with EPS between
60 and 70 cents.
The stock is trading now at 0.5 times this years revs and at ridiculously
low P/E multiples. As soon as the new story will be more visible in the
market place, there is no way you will see these prices anymore. My
estimate is that over the next 12 months the stockprice should rise to
the low teens.
Due to the above mentioned reasons this is just a growth story that has
not been realized by the market yet, though it will eventually.
Any comments?
Frank |
