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Subject: Our New Pick: CCGI
Date: Fri, 13 Mar 1998 07:52:22 -0800
Reply-to: "analystsgroup" <analystsgroup@goplay.com>
From: "analystsgroup" <analystsgroup@goplay.com>
To: forum@the-stock-market.com
Undervalued Dog, Volume 3, No. 9,
March 13, 1998
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ComTech Consolidation Group, Inc.
(OTC BB, CCGI)
Recent Price:
$0.4375-0.50/share
Daily Average Volume: 20.3
K
97 EPS: $0.01/share
(loss)
Estimated 1998 EPS:
$0.10-0.15/share
Trailing PE:4
Industry Average PE:
49.85
Div/Shr: None
Yield: None
52-week Range: $0.281-
5.0/share
Outstanding Shares:
13.38 M
Floating Shares: 2.4
M
Profit Margin:
25%
1997 revenue: $
0.825 M
Estimated 1998 revenue: $10-
15 M
SEC filing:April,
1998
Annual Meeting:
June
CCGI is extremely bullish.
Tendencies for prices to advance are
extreme at 95-100% with a short term
(1-6 months) upside potential of $4.00
and a long term (12-36 months)
upside potential of $10.00. Buy under
$2.00.
BUSINESS SUMMARY AND
CORPORATE BACKGROUND:
CCGI is a consolidation company
that is actively consolidating
(acquiring) businesses in two high
growth industries: Internet
Communications and Home Health
Care.
Computer networks have become an
indispensable for corporations -
many of which have set up Intranets,
or private computer networks, that
allow employees to access company
records and documents from remote
locations and communicate with
each other. Zona Research, a
Redwood, California market
research firm, estimated that
investment in Intranets could rise to
more than $13 billion in 1999 from
$2.67 billion in 1996. Along with the
convenience of remote access,
however, has come the threat of
unauthorized eavesdropping,
tampering and intrusions - because
these transmissions often take place
over unsecured telephone lines. This
vulnerability has created a rapidly
growing demand for computer
security hardware, software and
monitoring services. According to
DataQuest, which tracks the
computer industry, Corporate
American spent $6 billion in 1996 on
computer network security. CCGI
has positioned itself to be what
management believes is the only
company offering a complete range of
security solutions for every form of
electronic network communication.
CCGI, through wholly owned
Networks On-Line, Inc. (NOL, http://
www.nol.net), offers
telecommunication related products
and services, including network
hardware and security systems,
secured communication products,
computer products, Internet/
Intranet products and secured
virtual private networks. The
company is both a national Internet
service provider and systems
integrator. It is mainly focused in
the area of telecommunications
network security and Internet
services for commercial customers.
As both a national Internet service
provider (ISP) and systems
integrator, CCGI can provide
enterprise solutions independently,
completing a project without
outsourcing itself or requiring the
use of subcontractors. The company
is also qualified as a Sun, Tricord,
NSG, Hewlett Packard and IBM
RISC value added reseller. CCGI's
wholly owned NOL is Houston's
seventh Internet access provider and
is an authorized reseller for
manufacturers such as Ascend,
Cisco, 3Com, Bay Networks and
Digital Link. Most of these
manufacturers have or are currently
being utilized by all ISPs in their
local Internet access services. NOL
has an exclusive service contract
with a nationwide telemarketing
firm to sell local dial Internet access
in over 100 U.S. cities. The company
plans to seek out viable Internet
telecommunication and network
service entities for consolidation or
acquisition to further develop its
communications network. CCGI's
development of a domestic network
and its international expansion
plans are in line with its goal to
become a leader in network access
and intrusion security monitoring.
Another high growth industry is
health care whose total expenditures
in the health care industry exceeded
$1.56 trillion dollars in 1997.
Approximately $45 billion of this was
spent on home health care, one of the
fastest growing segments of the
industry. The home health industry
is undergoing a massive
restructuring which is being driven
by Medicare/Medicaid. New
regulations, increased scrutiny by
inspectors and higher quality of care
expectations are creating
uncertainties for small operators and
thereby creating opportunities for
companies which offer solutions.
CCGI recently acquired Professional
Management Providers (PMP).
PMP's core business is home health
care consulting. PMP is aggressively
seeking to acquire and consolidate
home health agencies. Letters of
Intent have been received from seven
agencies and negotiations to acquire
an additional sixteen are underway.
By improving communications
technology and centralizing
overhead, it is estimated that
operating costs can be reduced by 10-
15%. The additional sixteen
acquisitions will add revenues of $10
million to CCGI in 1998.
RECENT DEVELOPMENT AND
ANALYSIS: CCGI has retained the
services of I.W. Miller & Co., Inc. to
create and maintain a public
awareness regarding the growing
business activities of CCGI. Also,
CCGI Board of Directors has
authorized management to develop
and implement a buyback program of
its common shares. As initially
envisioned the proposed buyback
program will be conducted in
privately negotiated transactions,
commencing as soon as the program
is further refined and is fully
developed. ''The board authorization
to buy back stock reflects our belief
that the current market price of
CCGI stock is undervalued and
represents a solid Company
investment at this time. As initially
envisioned the program will protect
and preserve the equity value of
individual CCGI shareholders,
regardless of cost basis,'' said Mr.
Roger Stewart, Chairman and Chief
Executive Officer.
Since CCGI went public in June,
1997, the stock price has sunk from
the area of $7.50-9.50 to the current
lowest level at $0.30-0.50 including 1
to 2 split last September. Technical
analysis indicates CCGI continues to
consolidate under $1.00 and its On
Balance Volume indicates its under
accumulation and its Relative
Strength trades at an extremely
oversold level. Given its oversold
condition, its price remaining within
12 month the lowest trading range
and the appearance of significant
accumulation, its shares appear
ripe for a move upwards.
We are very impressed with the
background of the management
members and the smooth way they
have handled the acquisitions. They
presented us two priorities that the
company has now. First, the
management intends to grow the
company by aggressively acquiring
other profit businesses. The
management told us that 1998
promises to be very productive and
profitable and the company is now
positioned to make significant gains
in the high growth industries in 1999
and 2000. They are confident that
CCGI will become a 100-million
company by the year of 2000. Second,
they intend to enhance shareholder
value. Obviously, lack of savvy
knowledge in stock market and
efforts from its previous PR firm has
contributed to the stock poor
performance in the past nine
months. The management is
committed to changing this situation
by hiring a new PR firm. The
company will become a fully
reporting company in April, 1998 and
prepare to move its stock in
NASDAQ. With these recent
developments in coupled with its
stock buy-back program, we
recommend CCGI to both aggressive
and conservative investors. We
advise accumulating its shares now,
since once its shares begin moving
up again they are likely to do so very
quickly and consequently will be very
hard to buy.
Company Officers:
Roger R. Stewart Chief Executive
Officer/Chairman
Richard A. Behlmann - President &
Chief Operating Officer
Don E. Brown - Executive Vice
President
Chris Balque - Secretary & Controller
Company website: http://
www.nol.net/ccg2/ (under
construction), ccg.net
Contact:
Don E. Brown - Executive Vice
President
ComTech Consolidation Group, Inc.
10497 Town & Country Way, Suite 460
Houston, TX 77024
Tel: 713-467-7281
Fax: 713-467-0488
Investor Relations: I. W. Miller & Co,
Inc. Ira Miller or Omar Sanchez:
800-496-4553
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STATEMENT OF DISCLAIMER:
The information presented in the
Undervalued Dog is not an offer to
buy or sell securities referred to
herein. By no means is the above
company information complete. One
should obtain financial statements
and a full due diligence package,
including chronological news
releases, from this company prior to
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One should also use the full battery of
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anyone's investment decision.
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