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30
A small cap stock I wish I had owned was once like a small cap stock I do own
Posted by: Gerry Wimmer
1/30/2012
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Asian Television Network hockey stick stock price chart is based on improving fundamentals. Will DDS Wireless International stock price follow the same path?

It is not a junior gold stock, a social media stock, a bio-tech or clean-tech stock. It is a small cap stock that is making money, and plenty of it!

In January 2010, Asian Television Network International Ltd. (TSXV: SAT) shares traded for as little as 45 cents. Over the next two years, with its stock price steadily on the rise, the Company shares trade near $4 and pay a small dividend.

So what happened?

Did Asian Television Network make a major acquisition? No.

Did the Company's sector suddenly become the hot theme with the investment community? No.

The answer: Steady sales growth, prudent cost management and, of course, bottom-line profitable performance.

In 2009, Asian Television Network earned 5 cents per share on $16 million in sales. The Company reported 8 cents per share in earnings on sales of $21 million in 2010. In 2011, Asian Television Network earned 16 cents per share with a quarter still to report!

During this period, the Company maintained a debt-free balance sheet, grew cash holdings and issued no new shares.

Asian Television Network is speciality broadcaster of Asian sports, news and entertainment primarily for the Canadian-Asian marketplace. The Company's CEO owns 64% of Asian Television Network outstanding shares.

The Company has never has attracted any analyst coverage, nor has it needed to raise much in outside capital. Asian Television Network does very little active investor relations.

Once a small cap value play trading for less than 10 times earnings, Asian Television Network shareholders have been rewarded by the steady performance of the Company's fundamentals; a very strong balance sheet and growing profitability.

Today Asian Television Network is no longer a true small cap value play. The Company shares trade at 20 times earnings and have a market capitalization approaching $100 million and growing.

My takeaway from missing out on the Asian Television Network investment opportunity is that despite the analysts and investment houses ignoring the Company, strong fundamentals will prevail and reflect in the stock price.

This thesis is encouraging for the prospects of DDS Wireless International Ltd. (TSX: DD), the stock I do own and Investorfile's first posted Top Idea: DDS Wireless: Buy for value, ride the growth - December 4, 2011.

DDS Wireless International and Asian Television Network share all of the same attributes of balance sheet strength, growing sales and profitably, high management ownership and few shares issued. What the companies do not share yet is the hockey stick stock price chart.

Strong fundamentals will prevail.

Disclosure: TSX: DD - Long, TSXV: SAT - No position.


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with DDS Wireless International Inc. nor has it received any compensation from DDS Wireless International Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of DDS Wireless International Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.