Bill, I don't see where there has been any harm done, but we should stay focused on what the company is doing, not each tick. It is after all the progress of the company that will ultimately effect the stock price. Right now, as with any stock that is trading low volume, any selling at all will cause an exagerated drop in the bid price as the MM's are reluctant to take a stance.
The only time that you should concern yourself with price action is if you are a trader or if you as an investor see a massive selloff on large volume. Also if you see insiders sell off across the board the majority of their holdings, this too would be cause for alarm.
But we haven't seen either in Franklin, and recently the price has traded in a tight range between $2 to 2.50 on decreasing volume. That would indicate a basing pattern is being established, awaiting news that would set the direction for the next move.
Just try to relax and stay focused on the progress of the company from quarter to quarter. Now more then anytime in the history of Franklin is there a more promising future.
Think of them as a car with newly designed and untested big engine. They have the potential to power ahead. Each product and service is a cylinder. Right now we are firing and misfiring, but as each cylinder (product) starts firing it will quickly start contributing and adding to the horsepower, and when that happens the street will pay attention and dial in the turbo booster, to really add acceleration.
The 1st quarter of 98 (just started July 1) should be a turning point that starts to accelerate the revenues, as a few more products and services start to kick in this quarter, we should start to see some upward momentum both in revenues and the resulting stock price. The second quarter 98 (Oct-Dec) should really start to see some major improvement in revenue and that is when I also expect to see some meaningful black ink start to hit trickle down to the bottom line. Heading into the 3rd quarter is when should be firing on all cylinders, and that is when the street should turn up the boost.
In the interim, I think you will continue to see a volatile chart pattern, spiking on news and drifting back in quiet periods, with an upward bias over the next few quaters. Remember earnings and revenues are the only real gauge once we start producing, only then can the rate of growth be estimated with any accuracy.
Until then FTEL remains a story stock, and as all story stocks, a rollercoaster ride is normal. As they start producing the story unfolds, and actual growth replaces speculation, and P/E's start to rule the valuation that is placed on the stock.
So until then, it is all in how you interpret the story, one persons version is as good as another's. That is why you need to know the company, not the stock. In doing so, you stand a better chance of being right and help eliminate some of the risks that are inherent to story stocks, especially non reporting bulletin board stocks.
A quick visit to the www.ftel.com and a peek at the last two years of press releases should give anyone a feeling of comfort that they are moving forward and have big plans in a bigger market.
Progress is relevant and it is reflected in the price. Remember just two years ago Franklin was trading at 50 cents, so todays price reflects a 300% return on your money, or 150% per year. Not bad, not bad at all. The question to ask is; are they 300% better off then they were at 50 cents. Look what you own by comparison, 3 ISP's, Internet Passport, five new products in various stages of developement, a 70% stake in a proposed IPO, and numerous alliances with household name companies, all within and related to a burgeoning industry. Break each of the three divisions down, and ask yourself if they would be each command about a .75 valuation considering their niche markets.
I think if you do that, you will come to the same conclusion I have, that Franklin is underpriced. Remember FNET which in all respects has the least progress of any had no trouble getting $1.00 per share on a private placement, if like real estate, then that must be considered the real market value. Now that would leave 1.25 to be divied between Franklin and Internet Passport.
The only question to ask is if either division is worth more then .62 cents?
Slap me silly, but I think based on where we are in the progressive chain of events that either one could command a valuation north of $1.25, thus putting a minimum of $3.50 as a reasonable and justifiable pricing in my opinion.
That is why myself and others have viewed any break outside of the recent trading range as a buying opportunity. Either way, it makes no difference. I buy under $2.00 or I buy over $2.50 on volume, and really lay in the wood on any move over $2.75, because I feel that $3.50 is where we should be trading, right now. Go back a few days and I also put up a projection, and even that estimation would coincide with the $3.50. I believe it was a trading range with a low of $3.00 and a high of $7.20, and I believe I stated as news and events take place, along with earnings, that you place a sliding valuation somewhere within that range depending on much importance is attributed to the news release.
Hopefully Bill that gives you enough ammunition to feel comfortable with the company and the price fluctuations, now just use that info to best suit your investment style.
Raleigh
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