Investment Opportunity 1
This company endured a long period of unprofitability until about 10 years ago, when it developed a truly fantastic product with the potential to be used by many different industries. Because the product is so unique, the company had to develop the market for it. As with many new products, the market’s acceptance took some time. Finally, in 2004, the sales of this new product started to materialize and within eight years, the company’s revenues increased 26 times and net income turned positive. Since 2010, the company has been profitable every year.
While the market cheerfully bid up the company’s stock price when the revenues kept going up, it quickly sold it off when several big revenue drivers that were expected did not materialize. In other words, everything was fine when the ride was smooth but once the market saw a bump in the road, it quickly jumped off the bus.
From the current price levels, when some of these expected revenue drivers materialize, the stock price will likely take off like a rocket. And when this happens, it is a likely possibility that the company will get bought out by a larger company at five or six times the current price.
Investment Opportunity 2
This company is an interesting investment opportunity that very few investors are aware of. Currently, the company’s stock is only trading in Canada on the TSX Venture Exchange so if you have a brokerage account that allows you to buy Canadian stocks, then you should not have any problems acquiring shares. However, if your broker can only trade US stocks, then you will have to wait until the IPO process is completed (assuming it does get completed) and the stock begins to trade in the US. This is expected to take place within the next couple of months.
This company is an insurance company that used to be part of a larger company. Because the parent company had all sorts of operational problems, this company’s business suffered. The company went from writing $100 million to $20 million in premiums. It wasn’t until the parent company spun it off as an independent company in January 2010 that things started to improve. After two years of being independent, the company finally reported its first profitable quarter. Also, the company is pretty much back to writing $100 million in premiums.
While it is now official that the company is profitable, the stock price is still trading at a level as if the profitability was not there yet (actually it is already up 30 percent in a few days). I believe that as more quarters continue to show positive profitability and more US investors are exposed to this investment opportunity (as the IPO process takes place), the stock price is likely to adjust upwards.
Investment Opportunity 3
In order to write this monthly newsletter, I look through lots and lots of possible investment ideas before any one of them makes it to each issue. Most of the time, it takes me some time before I finally arrive at “OK. I see what is going on. Now, I understand why someone is buying this stock.” This is exactly the situation with this company. I was first exposed to it by reading an article about a friend.
At first, I dismissed the idea because I couldn’t understand it quickly, but then after studying it in detail, it clicked. Now, I understand why two hedge funds are heavily buying the company’s stock. The liquidation value of the company is higher than its market capitalization.