RDX Technologies RDX.V comment from a poster on Stockhouse:
stockhouse.com
TWO NEW REPORTS IN MEMBERS CENTRE A full report on Manitok Energy and a preliminary report on RDX Technologies have now been posted to the Members Centre. I’m now working on Chinook Energy. I urge you to read RDX. I think this new franchising model doesn’t just have potential, it has real growth and revenue happening right now. They announced one bit of franchising revenue in the last quarterly. That should be MUCH greater each of the next two quarters. This isn’t something that’s going to happen in the last half of 2014, or next year…it’s happening now. There are five “corporate stores” being developed now, and each of the next two quarterlies should give the Market updates on how they are being rolled out in the USA. The issue here is…CEO Dennis Danzik’s credibility with the Market is very low right now. He has changed the focus of the company from something very simple that energy analysts in Canada can understand—treating frack water—back to his original business, treating industrial waste water, removing the energy from it and selling that new refined product as something similar to #2 or #6 diesel. And he’s missed some of his own deadlines for corporate updates. I’ve spent a lot of time talking to Danzik over the last month. I’m flying down to have dinner with him later this month, and tour the Phoenix plant. The proof is going to be in the pudding on this story right away. If I’m wrong, I know I’ll be wrong very quickly. But at this price, I’m not paying any big premium for future growth that has already been baked into the share price. If Danzik can meet HALF his goal of 10 franchises per quarter, I see the stock doubling back up to my cost base of 50 cents and then some. I own so much stock I can’t buy anymore. Here are some back-of-the-napkin numbers I came up with. Remember--I’m not a numbers guy and when doing financial math I always have one foot planted firmly in the air. Please read the full report for context. Monthly Revenue and Gross Profit Estimates for One Franchise Assumptions: Franchisee produces and sells 30,000 gallons of effluent per month to RDX RDX purchase price per gallon (from franchisee): $.50 Total cost to purchase effluent: $15,000 Cost per gallon to ship to Carthage: $.50 Total cost to ship to Carthage: $15,000 Cost to process/refine each gallon at Carthage: $.60 Total cost of processing/refining at Carthage: $18,000 Selling price per gallon of produced fuel $3.50 ($.40 per gallon discount to diesel) Total revenue: $105,000 Sample income associated with a franchisee producing 30,000 gallons of effluent per month: Total revenue: $105,000 Cost to purchase effluent: $ 15,000 Cost to ship effluent: $ 15,000 Cost to process/refine effluent: $ 18,000 Gross profit margin per month: $ 57,000 But it’s a new team, a new business, and a new stock. Turnarounds usually take years, not quarters. And of course, long-term subscribers know my track record in energy technology stocks….sigh. But I think the positive surprise element here is very high.
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Here is their recent PR announcing the franchising program:
finance.yahoo.com
Replay of their December 19 business update conference call is available here:
investorcalendar.com
This audio replay is long but well worth listening to IMO. It has also been transcribed by PrecisionIR to a Word-compatible file that I have read but an currently unable to provide a link.
The stock has a market cap of about $40M. Revenues for the year ending 3/31/2014 are expected to be in excess of $50M. The company has announced and begun a buyback program. Those who have followed RDX know that they will be filing to relist as an American company sometime this year. Their target is to get a NASDAQ listing.
Today's move on good volume is impressive (to me); the stock may be about to break out.
DIsclosures:
I do not know who the poster on Stockhouse is, whether he is credible or not, and cannot vouch for his numbers.
I am long RDX and have been buying more the last couple of months in the teens and low 20s (cents). |
