Check out this DD on INVT from Raging Bull:
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By: WendyK
Reply To: 68 by TTIME Tuesday, 2 Nov 1999 at 9:24 AM EST
Post # of 70
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My DD and why I think INVT will be great:
I first learned of INVT from one of the stock picking newsletters (Millenium Picks). I usually don't play newsletter profiles, but I liked the ring of "fiber optics" so I thought I would learn more about the company at hand. My first step, was to make sure the newsletter did not receive any compensation from the company for profiling the stock, which it did not, and to have a look at some of their other picks to make sure they were not pump and dumpers. I can quickly tell a pump and dump maneuver from looking at a recent chart for a selected stock. It looks like this: flat line, spike, back to flat line again. That tells me, the company was so-so, the pump and dumpers arrived to pump and then bailed as everyone else got in, sending the stock back to its normal trading range. The last Millenium Pick was USTI, which has been in a significant upward trend for the last few months and within a stable band in the last weeks. No pump and dump. I like that.
So getting an OK feeling from the newsletter, I wanted to learn more about the company they were profiling. From the last company press release I obtained the telephone number of INVT President and CEO Brian Kitts, which is (801)-808-6096 and gave him a ring. I was pleased with our conversation, which lasted about 15 minutes. Brian struck me as a serious-minded businessman and a straight-shooter.
He described the following situation: INVT up to now has essentially been a shell. A few months ago, Brian met the owners of FibrX, a privately held fiber optics company, and they came to an agreement to take FibrX public via a reverse merger into INVT. FibrX is involved in two things: (1) the arbitrage of fiber optic cable and (2) the actual sale of time on fiber optic lines. Their business consists in buying fiber by the bundle (12 strands to a bundle) and then reselling the strands for those who can't afford or don't need a full bundle. A bundle is the minimum amount sold by the large companies, so FibrX is meeting a niche demand within the fiber optics industry that few other companies are satisfying. The company is also involved in reselling portions of the strands for companies that don't need a full strand all the time, for instance, to a company that might need to use a fiber line two or three hours a day. According to Brian, it is an extremely lucrative business. Brian is the majority shareholder in INVT, but after the reverse merger FibrX will be.
The best part, is that Fibrx brings to INVT a $30 million contract in place with several other major contracts pending.
Brian told me there were 9.8 million shares outstanding in INVT, with a float of about 2.4 million shares. Afer our conversation I called the INVT stock transfer agent, which is Olde Monmouth at 732-872-2727 and verified that the shares outstanding corresponded to what Kitts told me. The shares did.
Anyway, now some analysis:
I have no idea what the profit margins are in this business, but even assuming a lowly 10% margin, if they have a $30 million contract ready to go, we should see profits of about $3 million. With 9.8 million shares, that give us earnings per share of about $.30 and with a conservative EPS ratio of 10x, we would easily have a $3 stock right now. With higher profit margins than what I have assumed, more money coming in (as Kitts alluded to), and taking into account the sexy appeal of fiber optics to the investment community right now (for instance, look at Sycamore -- NASDAQ: SCMR-- a start-up fiber optics company that recently went public at $38 and yesterday closed at $220!) I think this stock will be in the double-digit dollar range very soon.
In any case, at $.49, which is what INVT closed at yesterday, I think this stock is a colossal steal.
I think investors who get in now and hold are going to get rich.
Needless to say, this being the OTC world, there is more risk than investing in a NASDAQ type issue like SCMR, but I think the potential rewards are far greater. In fact, no comparison.
To belabor the point: Between Friday and Monday I purchased 105,000 shares of INVT. I am holding for at least $10, which I think we will see in a few months, maybe sooner. At that price, my holdings will be worth $1 million, which to me, is financial independence. I don't know where else I could get this sort of return and that is the reason I am willing to take a chance with this stock.
Furthermore, I know of no place anywhere, where I could purchase shares of a fiber optics company going public at $.49.
So, to sum it up, I think this stock is a fantastic opportunity.
Please do your own research and post your findings -- positive or negative -- on the board, so that we can all benefit. |
