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Microcap & Penny Stocks : Transnet-TRNT
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To: Bob Davis who wrote (123)2/5/1997 11:12:00 AM
From: Byron Angel   of 140
 
I believe TRNT is now attractive for 3 reasons:

1. The business TRNT is in is currently experiencing rapid growth. There is a good discussion of this in an article in the 12/9/96 edition of Barron's entitled "Golden Days - Business is booming for the computer-service companies". Some excerpts from the article:

"For the companies that put together, maintain and run computer systems for others, a Golden Age has arrived. With outsourcing still on the rise throughout Corporate America, the market for computer services has boomed to perhaps $100 billion a year. And it shows no signs of leveling off."

2. TRNT's industry is undergoing consolidation, and as a result there is a possibility that the company could be acquired, which I believe would occur at a significant premium to the current price. There is also a good discussion of this in the Barron's article cited above:

"The industry's rise has been marked by acqusitions aimed at bolstering market share and acquiring skilled personnel. Still, the computer-services universe remains fragmented. George Logemann, an analyst with Yankee Group, which tracks technology firms, says a lot more mergers lie ahead."

3. The stock appears to be very undervalued. It is currently trading at about 11-12 times what I project the company will earn in the fiscal year ending June 30. TRNT's service and support revenues are increasing at a 40% rate and for the next several quarters I project year over year growth of earnings above 50%.

Byron
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