Still here, still long, still buying.
Missed your post while away on business. Keeping up with all the contacts, though. lOOKS LIKE THE WORST IS OVER. Expect to see the stock trade above 5 in the next week or so.
Read the 10Q today. Inventories down, but not as much as I'd like. Receivables flat, no surprise, since ongoing business will replenish what's been paid. $39 mil is about 50 days, more or less - not horrible, not great. Business is slower, obviously. First half EPS of $.24 annualizes to $.48 - so we're curently at a PE of 10 going into the strongest half of the year. Undervalued by any measure.
The OTC/small cap market since Feb. is the worst I have ever seen. Many stocks in my portfolio are below cash/share, most below 10 PE,and all down more than 50% for the year. Newcom is no different. The story is still good, the times are bad, and management will hopefully act on the hard lessons of the last 9 months.
I expect the company to earn at least .60/share this year, which is better than last year after dilution. However there may be some upside surprises. One of these could result from favorable debt settlements with vendors. For example, if Newcom owes a vendor 8 million, and the account is wiped clean for 6 million - Newcom books the 2 million difference as a profit. And it goes straight to the bottom line. Desperate for cash, some of the Asian vendors are striking deals like this. Keep your fingers crossed.
Stay cool. |
