******Undervalued Dog****** Volume 4, No. 44, April 21, 1999
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Diamond Entertainment( OTC BB : DMEC)
Recent Price: $0.11
Daily Average Volume: 0.810 million
52-Week Range: $0.026-$0.50
Outstanding Shares: 34.51 million
Active Float: 11.72 million
Market Cap: $4.35 million
% Owned Management and Insiders: 67
Last 12-month Revenues: $5.41 million
Last 12-month EPS: -$0.14
Projected 2000 revenues: $18.5 million (Began April 1, 1999)
Projected 2000 EPS: $0.08 (Began April 1, 1999)
Recommendation: Strong Buy
Short-Term Target Price: $0.50-$0.60
Company Website (Under construction):
diamond-entertainment.com
BUSINESS SUMMARY AND CORPORATION BACKGROUND: Diamond Entertainment Corp.,
(OTC BB: DMEC) through the CA subsidiary, markets and sells variety of
videocassette titles to the budget home video market. DMEC also
manufactures, purchases and distributes children's toy products.
DMEC has three major product lines. First, DMEC's division of Video
Distribution and Marketing has over 300 titles in 3 categories;
educational titles, classic film, and instructional video. Among their
videos are a learning series for children in subjects like phonics and
math; computer related instructional videos. Also, over the last year,
the Company has developed a highly successful line of religious titles and
is looking for acquisitions in these categories. Second, DMEC' division
of General Merchandise sells toy products and sundry merchandise to large
discount retailers. The Company has just given this division a face-lift
and has entered into a deal with a marketing and Infomercial Company with
guaranteed unit sales. Third, DMEC has developed CineChrome Cards that
are a patented chromium card. DMEC just completed the first 20 cards with
Norman Rockwell images licensed from Curtis Publishing. Cards are
currently placed in Hallmark Gold Crown stores. The Company will soon have
20 images from Universal Studios which will be marketed in retailers like
Music Land. Diamond is also currently undergoing talks with several large
corporations about doing CineChrome Holiday cards. This is a potentially
enormous market.
SUMMARY: DMEC just established its e-Commerce Division. We believe
e-commerce will create huge potential for DMEC. The Company is currently
building a top quality web site for an E-Commerce shopping mall and is in
discussions with numerous and varied retailers about distributing their
products through DMEC's web site. The Company believes it will have over
100,000 items offered through its site within the next 6 months.
DMEC has an impressive customer base including such major retailers as
Best Buy, Musicland Group, Wallgreens, Walmart, Sam's Club and Osco. They
are also currently testing in Costco, are in discussions with large
clearinghouse/mail order companies, and are negotiating with some major
banks to have inserts in all those monthly credit card statements that
customers receive.
Our conservative projection for 2000's revenues will be about $18.5
million with EPS at $0.08. If the Company is able to complete some of the
major contracts that are currently in negotiation, we believe that the
above numbers will increase dramatically, possibly double the current
projected revenues and earnings for next 12 months.
We believe that DMEC presents a classic turnaround situation with a huge
Internet play. Last February, The Shares went up as high as $0.50 on the
news that DMEC will have an e-commerce division. Since then the stock has
retreated and consolidated in the range of $0.10. We see there is
technical support around in the range of $0.07-$0.08. The trading volumes
have been up in the past ten days. We heard that DMEC will open its
Internet shopping mall very soon. We believe the stock presents us a best
opportunity to get in now for both short-term and long-term gains. The
short-term target price is $0.50-$0.60.
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