After predicting GMAI at $4, BAMM at $8 and NAVR at $4 within just days of their skyrocketing to different levels, I placed a strong buy on SKYM. I bought in around $5 and it went to $38 today- just 12 days later...i sure feel foolish about selling all my position at $12.375! But, now i have a new one. one that is a fantastic play in my mind- possibly much better than SKYM. The stock.....
DMRK- Damark Industries
Financial Facts:
SKYM has annualized revenues of over $520 million. There is only 6.3 million shares outstanding and a low float of 2.2 million. With a stock price around $7 and moving up, the market cap is an absurdly low $45M.....less than 10% of its annual sales. This is in comparison to SKYM that was trading at 1x sales before i analyzed it and bought it. this is 10x cheaper. If DMRK becomes as profitable as SKYM and begins forming internet alliances to reach a similar 5x sales valuation- DMRK would go to $400 per share. we will talk about this later.
My Opinion:
Rumors abound that DMRK is forging internet alliances. Hearsay tells me that their own IR people have confirmed an update to their internet site to become active in just a few weeks. In addition, DMRK has paid down its debt, re-purchased $15 million in stock and targeting higher margen customers.
From SEC Filing
GROSS PROFIT
The growth in the membership services segment and margin recapture initiatives by the retail services segment have provided significant gross profit improvement over the prior year. The overall gross profit margin as a percentage of net revenues for third quarter 1998 increased to 38.5%, as compared to 30.6% for third quarter 1997.
My Target Price:
a more than reasonable target would be 1x sales or $500M divided by the 6M shares, or a price of $80+ per share. internet valuations would place this baby at $400 per share...after all, they have over 1.5 million members as seen below. my target is undecided at this point.
From SEC Filing
As of September 26, 1998, club membership of 1,520,000 members, including approximately 129,000 free-trial members, was over 25.5% higher than club membership at September 27, 1997.
Time Frame:
I expect to a quick double over the next week and a meteoric rise in 2 weeks when the internet update is completed. (December 28, 1998).
Conclusion:
Only risk what you can afford to lose. Be careful of margin and market orders on the open. Be smart and take profits. Be smarter and know when to take losses and move on. And finally, GOOD LUCK TO ALL!!!
dwlima |
