...und dazu noch leckere Weihnachtskaufkurs heute:
Anyway you slice this pie, CPNE has been a huge win for OTC Journal subscribers in 2006, and 2007 could be just as good or better with a potential bump in the road.
I have been calling CPNE my #1 idea since the stock was $.50 for all of 2006. Will it be my #1 stock idea for 2007? A little too early to tell, but it certainly has the potential to be there.
The weekly chart of the stock pretty much says it all for 2006. Was I spitting mad the stock did not trade to $2 as I had forecasted? You bet. Big disappointment. Am I pleased when I receive emails from investors who tell me they still own the stock at $.38? You bet. Do I still think it's going to $2? You bet, and probably a lot higher.
The folks that run CPNE are probably the most brilliant email marketers on Planet Earth. Every thing improved this year when they started offering a greater value proposition to their members. Their focus on bringing greater value to their subscribers is showing in both membership retention and new memberships.
A little retrospective review is in order. Let's look at the numbers for 2006:
Q1: $3.3 million revs, $200k profits, <$.01 EPS Q2: $7 million revs, $1.4 million in profits, $.04 EPS Q3: $7.6 million revs, $3.1 million in profits, $.07 EPS Q4: ? There's the question: Q4? But, is it a question? I don't believe it is. I believe both Q4 and Q1 '07 will be outstanding. Here's why. CPNE clued everyone in to their Q4 progress with the December 12th press release wherein CPNE disclosed it had set an all time weekly record for new memberships. The company landed 20,000 new memberships in the first week of December alone- an all time record. In Q3 91% of CPNE's revenues came from membership fees.
Based on the way CPNE books its revenues, December's new memberships spill into January revenues. Hence, we have a certain comfort that numbers will continue to improve over the next two quarters. After three consecutive quarters of strong growth and substantial profits, haven't they earned the benefit of the doubt until proven otherwise?
Despite tripling this year, fundamentally CPNE is still one heck of a value proposition. Think about the following. Last quarter they earned $.07 per share. This suggests annual earnings of $.28 per share with no growth. The PE Ratio for the S&P 500 is about 17.3. CPNE has grown faster than any company on the S&P 500 in 2006. If CPNE were to trade at the 17.3 PE ratio the S&P sports, it would be $4.84. This company is making $1 million a month.
There's the fundamental side. Now, let's discuss the technical side. There are many who feel CPNE is very undervalued, and don't understand why the stock is not higher. The problem probably relates to about 14 million shares owned by early financiers who own their shares for next to nothing and have probably been selling. No one can say for certain until there are updated filings, but it seems likely this has been the source of supply.
Over the past couple of weeks the supply has dried up and the stock has been drifting slightly higher on light volume, but I believe there could be a warning flag here.
I believe there is a chance- just a chance, far from a certainty, that CPNE might sell off in the first half of January. Why? Consider the following. The supply off this stock has dried up considerably in December. Why? Are they out of shares. Hardly. There could be a lot more for sale. Think about this- if you sell a stock in December at a huge profit, your taxes on the profits are due in 4 months. If you sell the stock in January, you pay the taxes in 16 months. Not a bad return for waiting a few weeks.
If the stock drops it will be a great buying opportunity.
Here's what to look for in 2007: I believe you might see the first institutional research following on the company. You might see major institutional participation in the stock. You might see the company graduate to a senior exchange- AMEX or NASDAQ SC- you might see the company use some of its cash for acquisitions- you might see the company bought out by either a private equity group or another public company.
Also- you might see the stock at $5 plus if they stay on path. Yes, I will be following this one in '07.
euer goodman666 |