Notice a lot of commercials for payday loans of late? Does the pawn shop downtown seem to be thriving? What about that rent to own furniture place that promises no payments til 2012?
These businesses are actually part of a growing trend that was unwittingly given a massive shot in the arm by the global downturn of 2008-2009. The Federal Deposit Insurance Corporation estimates that half the worlds population has little or no access to basic banking services. And the US isn’t immune; the FDIC says that one-quarter of all people in that country are “unbanked or underbanked.”
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Shares of Selectcore (TSXV:SCG) are on the march; rising from $.20 cents on May 2nd to close at $.69 cents today, more than tripling the company’s market cap in just five sessions. So why the move? On May 5th, SelectCore received approval for its Iridium brand MasterCard from the United States Patent and Trademark Office. The Vaughan, Ontario company, which was established in 1999, has its roots are in selling prepaid telecom to an established network of retail convenience and grocery store locations. Selectcore has grown its revenue from $37 million in fiscal 2006 to over $103 million in 2010.
The prepaid wireless market is a good place to be. Telecom industry research firm Atlantic ACM estimates that this sector will grow from $19.3 billion in 2010 to $25.3 billion by 2015. But those numbers are dwarfed by the size of the prepaid credit card market. An independent research report commissioned by MasterCard estimates that market will surpass $440 billion by 2017, which is more than four times its estimated 2009 value of $120.2 billion
Selectcore’s Iridium joins the company’s other financial offering; ReCash, a voucher that can be loaded with cash and transferred instantly to another customer’s card via text message, online or by dialing a toll-free number.
Selectcore says the their new financial offerings are helping to improve the thin margins the company has experienced with prepaid wireless. In the fourth quarter of 2010, after non-operational, one-time year-end adjustments, gross profit was $1.76-million, an improvement of 223 per cent over the same period in 2009. President Ryan Deslippe says that Iridium, ReCash and “new product launches to be announced in 2011, will be key drivers of high-margin profitability.”
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SELECTCORE (SCG)– DEEP VALUE DISCOUNTED stock with good fundamentals and NO BUSINESSimpairments. Long term debt is one time gross margin, very little liquidityrisk and tons of opportunity and growth ahead.
SELECTCORE(SCG) is a hugely undervalued company here in Canada which isfundamentally cheap, a company which trade at huge discount to current cashflow, never mind future cash flow of contracts which have been signed andsecured–SELECTCORE (SCG) is one such company in the prepaid VISA/MASTERCARD& Phone Card.
Here is a stock that would be categorized by Graham, Buffett, and Lynch as astock that would meet all of their FUNDAMENTAL ANALYSIS criteria as beingcheap: SELECTCORE (SCG) a technology company listed on the TSXV in the prepaidcards industry. Reasons to own SCG:
1.Over 100M in sales with less than one times gross margin in debt, growing thetop line at around 20-35%.
2.Highlighted in PROFIT MAGAZINE over the past 4 years as top growth companies interms of revenue growth.
3.Signed 3 year agreement in South America most recently.
4.Expansion in USA.
5.Further expansion in the prepaid Mastercard in Canada.
6.New Patent Pending Technology which allows for top up using competitorsterminals which will reduce cash flow, increase gross margins and increase cashflow, thereby increasing the enterprise value significantly.
7.Current enterprise value is STILL discounted to past revenue.
8.We haven’t even considered any additional expansion and revenue growth.Currently market cap of around 65M does not even take in account of all the NEWGROWTH DRIVERS.
9.Hugely discounted to peers in USA such as GREENDOT or NETSPEND.
10.Huge margin of safety at current market capitalization, and could go temporarily lower due to negative market sentiment in the short-term–which makes it even a greater buy.
11.Insiders are aligned with shareholders interest.
12.Potential royalties payments for use of patent from competitors.
13.SCG could be a take-out target.
14.Increased scalability due to patent and infrastructure in place.
One can speculate other reasons, but speculation is only for self. Sorry won’t be attending the annual. Hope you all have tons of fun. Wish they’d have a conference call option. All the best!
Shouldn’t you review your analysis, considering Selectcore is almost bankrupt now? I’m not sure the Graham, Buffet and Lynch you make mention of would like to hire you or even be referenced by you for such a lousy stock pick.