Microcap investor 2000 says ONSS to $40.Subj: On-Site Sourcing Report
Date: 3/5/00 10:45:48 PM Eastern Standard Time
From: microcapinvestor2000-owner@listbot.com (Microcapinvestor2000)
To: microcapinvestor2000@listbot.com (Microcapinvestor2000)
Microcapinvestor2000 - onrampproductions.com
Welcome to our fourth newsletter! Below we have listed our report for our
latest stock pick, On-Site Sourcing. We are hard at work at web
improvements, so check throughout the day at our site for our latest
complete report which will include:
The report sent to you below with graphs
A review of past picks:FBCE, AMCM, and NATS
Market Analysis: Why wasn't I there at .25?
Important information on the SEC crackdown against internet stock fraud.
Onsite Sourcing (ONSS)
On-Site Sourcing Inc. is a fully reporting company that trades on the
NASDAQ small cap, under the symbol ONSS. They provide reprographic,
document management, digital imaging and printing, facilities management
and information technology services to law firms, corporations, non-profit
organizations, accounting firms, financial institutions and other
organizations throughout the East Coast of the United States. On-Site
provides reprographic and imaging services 24 hours-per-day, seven
days-per-week including copying, binding, labeling, collating and indexing
in support of complex document-intensive litigation as well as higher
volume production of manuals, brochures and other materials for
corporations and non-profit organizations. On-Site also provides
on-premises management of customers' support services including mailroom
operations, facsimile transmission, records and supply room management and
copying services. Thus, they provide a key service to customers that
allows an opportunity to outsource the entire infrastructure needed to run
a business. As customers have increasingly seen the merit of outsourcing
the "backoffice" to cut costs and protect revenue, ONSS has stepped in to
fill those needs. Not excited yet? Keep reading, and you will see why we
think On-Site has the potential to return 1,000% THIS YEAR. And of course,
since we are featuring them, you know the company has plans to utilize the
internet in a manner that we believe will greatly improve the bottom line
for years to come.
Internet plans and key patent:
On-Site has an aggressive plan to capture real time, billable data from
their photocopier machines and to integrate this data into a web based
document management system which is based on state-of-the-art shipping,
tracking, billing and electronic file management systems. The Company's
proprietary process, which is called Costrax, has been launched as a pilot
at its Arlington, Virginia, office. The Company expects that by the end of
the first quarter of fiscal 2000, all its offices will be transmitting
invoicing data via the Internet, creating a dramatically improved document
management capability for its customers.
To this end, On-Site announced on February 1, 2000 that it had received a
U.S. patent for its real-time invoicing and productivity analysis
technology. The patent is titled System and Methods for Tracking Copy
Count Information From a Plurality of Photocopy Machines, and is a key
component toward protecting the company?s internet initiatives, which we
think will reap huge rewards and continue the company?s already impressive
trend for greatly improved earnings.
Surging Profits:
For the fourth quarter of 1999, the Company reported revenues of $7.4
million compared to $7.9 million for the same quarter last year. Last
year's fourth quarter had included sales of $204,790 from the Company's
information technology division, which was sold in October of 1999.
Earnings from operations more than tripled, from $223,039 in the final
quarter of 1998, to $683,661 in the comparable period of 1999. Net income
rose from $127,617, or $0.03 per share, in the fourth quarter of 1998 to
$726,245 million, or $0.15 per share, in this year's fourth quarter.
For fiscal 1999, revenues were $26.7 million, an increase of about
$700,000 over 1998 revenues of nearly $26 million. Earnings from
operations improved dramatically, from an operating loss of $1.4 million
in 1998 to operating income of $855,981 in 1999. Net income also rose
significantly, from a net loss of $997,613, or $0.21 per share, last year
to net income of $790,138, or $0.16 per share, this year.
Christopher Weiler, chairman and chief executive officer, commented on
this greatly improved performance, stating, ``Our fourth quarter results
clearly reflected the benefits of refocusing our strategy and
concentrating on our core businesses. We're very pleased with our
bottom-line growth.' The key, of course, is that On-Site expects to
continue the trend of improving earnings. Weiler hammered this theme,
commenting, ``We've entered 2000 with a growth strategy rooted in our
e-commerce initiatives and focused on national expansion. Based on results
for the month of January and the first part of February, we've generated
record sales, and our backlog is very strong. We expect that both revenues
and profits for fiscal 2000 will show a strong improvement over 1999
results.' Despite markedly improving fundamentals, most have not yet
discovered On-Site Sourcing.
The Market is just beginning to take notice:
On-Site Sourcing currently trades at 3 ó, with a 52 week low of 7/8 and a
52 week high of 4 ¬ set on March 1, 2000. As the chart below illustrates,
On-Site traded between 1 and 2 for most of 1999, and no one seemingly
cared. But, as the company?s performance has improved, investors have
begun to take notice, starting in January. Here we clearly see increased
volume and a first price spike from roughly 1 to 4:
We recommend that our readers take the time to re-read our Fibercore
profile from the first issue to note the similarities between the two
companies. The best part, of course, is that despite On-Site?s recent run
up, the company remains incredibly undervalued when compared with peers.
ONSS vs TRSI
Like ONSS, T/R Systems designs, develops and markets digital document
processing and printing systems, consisting of proprietary software and
hardware, for the print-on-demand market, and is a recent IPO.Let's
compare financials:
TRSI:
Revenue for the fourth quarter ended January 31, 2000 was $6.6 million, up
74% from $3.8 million in the fourth quarter ended January 31, 1999 and up
from $5.8 million for the third quarter ended October 31, 1999. Net income
for the quarter ended January 31, 2000 was $265,000, or $0.03 per share,
compared to a loss of $271,000, or $0.11 per share, for the fourth quarter
ended January 31, 1999. Based on Friday's closing price of 24.875, TRSI
sports a market cap of 291.9 million, a PE of 340.75 and a book value of
negative3.44!
ONSS:
For the fourth quarter of 1999, the Company reported revenues of $7.4
million compared to $7.9 million for the same quarter last year. Last
year's fourth quarter had included sales of $204,790 from the Company's
information technology division, which was sold in October of
1999.Earnings from operations more than tripled, from $223,039 in the
final quarter of 1998 to $683,661 in the comparable period of 1999. Net
income rose from $127,617, or $0.03 per share, in the fourth quarter of
1998 to $726,245 million, or $0.15 per share, in this year's fourth
quarter. Based on Friday's close of 3.75, ONSS has a market cap of ONLY
18.1 million, a PE of 23, and a positive book value of 1.29!
SO: ONSS has greater revenues, greater net profits, greater profit per
share, and positive book value, yet trades at a market cap that is 16
times less than TRSI's! If ONSS traded up to TRSI's market cap, their
stock price would be 60 dollars/share!
Why is there such a disparity? We believe that both companies are in a
high growth area in the economy and should do well. However, TRSI has the
added benefit of recently having their IPO. This immediately focuses
investor attention on the stock, and helps them obtain lofty valuations.
In addition, the company has benefitted from recent analyst upgrades from
Robertson Stephens and Piper Jafray, a common practice for IPO's after
their first 30 days of trading. These upgrades have confirmed
institutional support for TRSI, but are also votes of confidence for the
entire digital printing/graphics industry. We can only conclude that the
massive disparity in valuation is because many investors don't know about
ONSS, and we think that is going to change.
Management's plans to increase investor value:
Recognizing that their stock is undervalued, On-Site's management has
taken steps to increase investor awareness. In December, On-Site announced
that it had retained The Poretz Group to serve as its investor
relations counsel. Mr. Weiler, chairman and chief executive officer of
On-Site Sourcing, noted at the time that, ``The Company is now ready to
take advantage of an investor relations program. We are adopting a more
growth-oriented vision, anchored largely in technology initiatives we plan
to implement in our document management and imaging divisions, and we
believe we will become increasingly of interest to a wider base of
potential investors with whom we will communicate our story.'
In addition, On-Site has taken an active role to increase shareholder
value by authorizing a stock buyback program. In January, the company
announced the intention to repurchase up to 500,000 shares of its
common stock. Mr. Weiler commented, "We believe that the stock of On-Site
Sourcing is undervalued, given the growth of our document management and
imaging businesses, the market potential, our proprietary document
management technology, and our experienced management team.' We are
impressed with management's actions to increase shareholder value and feel
that it is only a matter of time before investors come to realize that
ONSS is a tremendous bargain.
Final Analysis:
We commented in our section on "Why wasn't I there at .25?" that most
everyone can point out the reasons for a stock's rapid rise after it has
occurred. In this case, we can clearly see the reasons now. ONSS is
involved in a rapidly growing field that is experiencing great growth. In
fact, Mr. Weiler reiterated these sentiments in December, when he
commented, "we expect that revenues for our Imaging Services Division will
be between 75 to 100 percent higher in fiscal 2000, as we continue to
expand our customer base and volume of services. We'll enter the new year
with a significant backlog of imaging work and expansion opportunities."
We expect continued improving financials, and are fairly sure that as year
2000 progresses, the market will reward ONSS with the market cap it
deserves. Our one year target, assuming revenues and earnings continue to
rise is 40 dollars/share, or roughly 1,000% above the closing price of
3.75 on Friday, March 3, 2000.
ONSSW:
As a last note, On-Site also trades warrants on the common market,
(ONSSW). The terms are 1 warrant plus 6 dollars buys you one share of
common stock. Although the warrants currently have no intrinsic value,
they closed on Friday March 3, 2000 at 1 dollar, and expire on July 8,
2001. The warrants do offer an intriguing way to invest in ONSS. Let?s
say, for argument sake, that the market only values ONSS at 10 dollars per
share this year (25% of our target). In this instance, the stock would
have appreciated roughly 175% from its current price of 3.75. BUT, the
intrinsic value of the warrant in this situation would be 4 dollars, or
300% above the current price of one dollar. For those unfamiliar with
warrants, we will be covering this topic in a future newsletter.
Company Information:
On-Site Sourcing
1111 North 19th Street, Suite 600
Arlington, VA 22209
Phone: (703) 276-1123
Fax: (703) 276-1172
Email: aduncan@onss.com
Employees as of 12/98: 450
Market Capitalization $18.1M
Shares Outstanding 4.83M
Float 3.00M (May be less now given company buyback program)
website: onss.com
About Microcap Investor 2000:
Our goal is to seek out those securities on Nasdaq, Nasdaq small cap, and
otc:bb that show incredible potential to take advantage of the internet
revolution. The areas we concentrate in are infrastructure (broadband,
wireless, etc) and e-commerce. We only feature securities that we feel
have tremendous short and long term potential. We have received no
compensation of any kind from any of the companies featured in the news
letters, but often do hold positions in these securities. We reserve the
right to buy and sell these securites as we see fit and as market
conditions change. We urge all readers to do their own due dilligence and
discuss investment goals with a professional before considering purchase
of any security mentioned herein.
MicrocapInvestor2000 Website:
onrampproductions.com
Coming Next Week:
Market Analysis: When should I sell?
A review of past picks
Another great undiscovered company
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Subject: On-Site Sourcing Report |
