TOP IDEAS: Beaten down from the oil slump, Titan Logix
(TSXV: TLA) is positioned to grow again, which means opportunity for small cap
Note: Investorfile's share price accumulation target of $0.75 for Titan Logix
Corp. was reached on February 5, 2013. For the record, we do not revise share
price targets for our Top Ideas - Small Cap Value Stocks. We have positioned
our blog to be one of the first providers for a pragmatic perspective of a
small cap company stock's potential worth, where there may be uncovered value
that has been largely overlooked by the investment community.
The stock, Titan Logix Corp. (TSXV: TLA - C$0.60) was once
big gainer for the Investorfile blog. At its peak, shares in Titan Logix
generated an investment return of 234%, 24 months after we published our first
blog post about the Company in 2012 (See: Titan Logix:
Fluid in value and growing rapidly).
But that was then and this is now. Today the Titan Logix’s
shares trade at a price less than half its historical highs precipitated by
the collapse of world oil prices two years ago and what followed: massive
spending cuts by the oil and gas related industries, the Company’s main market.
As a result, the Company’s revenues and profits have plummeted.
Even still, we feel that Titan Logix may be ripe for a
recovery and the Company remains on our list of Top Ideas.
Titan Logix is an industrial technology company focused on
manufacturing and marketing of advanced fluid management solutions. The
Company's flagship products, the Finch II™ display/controller, designed for use
with the Titan TD80™ - a Guided Wave Radar (GWR) gauge for mobile crude oil
tankers - is the market leader for electronic fluid level measurement and
overfill prevention products in North America.
Over the last two years, the Titan Logix has invested on
research and development. The Company digitized its technology and introduced telematics to enhance its product data capture capabilities to measure crude
tanker truck driver productivity and delivery times, spillage and safety
records which now can be accessed remotely on the cloud. Recent product
improvements have been well received by its customers according to the Company.
After two years of slumping tanker production, the demand
for new crude oil road tankers in North America
(the Company’s traditional market) has stabilized. According to Company
the market is showing signs of recovery based on an increase in customer
Titan’s next generation of digital Guided Wave Radar
products and market introduction is expected by the end of calendar 2017. This
will be a critical milestone for the Company. This new gauging systems is
designed for the "refined fuel" mobile tanker market. Refined fuel tankers
are the road trucks that deliver gasoline to retail gas stations. Titan Logix will
be first-to-market with a line of electronic fluid gauges specifically designed
for refined fuel road tankers in North America.
Last week the Company released its fiscal 2017 Q3 financial
results and, as expected, Titan Logix reported a loss of C$366,000 or C$0.01
per share. The loss was significantly less than the prior year quarter and
revenues have begun to stabilize quarter to quarter. Of greater significance is
the Company’s balance sheet: C$15.1 million in working capital, of which C$13.9
million (C$0.49/per share) is in cash. Titan Logix is cash-rich and debt-free.
We expect that Titan Logix will return to profitability
some time in the latter half of fiscal 2018 based on the expected sales traction
of new products as well as from a measured recovery occurring in its
traditional markets. Given this prognostication we encourage small cap value
investors to begin accumulating stock of Titan Logix (again) to a high of
C$0.75 per share. This is the same target price we used when the Investorfile
blog first introduced the Company back in 2012, after which the stock rose to
over C$1.50 per share.
For patient small cap investors we see little downside (and
plenty of potential upside) in owning this stock at current valuation levels
given the Company’s strong cash position.
Titan Logix has approximately 28.5 million shares
The Company’s website www.titanlogix.com
Author Ownership Disclosure: TSXV: TLA- Yes
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 Titan Logix Corp. nor has it
received any compensation from Titan Logix Corp. for the preparation or
distribution of this article.
The author of this article has
acquired and may trade shares of Titan Logix Corp. through open market
transactions and for investment purposes only.