Want to Double Your Investment? Of Course You Do. Buy MER Telemanagement Solutions Ltd. Before Earnings.
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
OK, so you’re probably thinking to yourself, “What makes MER Telemanagement Solutions Ltd. (MTSL) different than any other stock heading into earnings?” and “What can drive MTSL stock up 100%?” Well, you’ll find out shortly. For now, let’s learn a little about the company.
“MTSL? What do they do? Who are they?”
Based in Israel, via wholly owned subsidiaries operating out of the United States, Hong Kong, and The Netherlands, MTSL serves the growing global demand for comprehensive telecom expense management (TEM) and enterprise mobility management (EEM) solutions.
What does this mean? Major corporations have extensive telecommunication demands. MTSL streamlines the entire telecom life cycle for their clients. Not only does MTSL provide a value added service to organizations, but by outsourcing the entire life cycle, from procurement, asset management, budget management, quality control, contract and vendor negotiation, and other aspects of the cycle, the organizations can cut internal expenses, focus on their core competencies, and allow MTSL to provide expertise through its entire network and proprietary innovative solutions. Since this is MTSL has this domain expertise, clients can actually reduce costs, provide better telecom solutions, and adapt quickly to changing technology with ease.
“How come I haven’t heard of them earlier if they provide such great solutions?”
Currently, MTSL is a relatively small company. At $4/share, the company is valued at approximately $18 Million. This market cap is very small, but growing. MTSL does not offer products or solutions to individuals or to small businesses. Large corporations or the enterprise space, benefit the most from hiring MTSL and paying for their services. Small businesses or individual families with a small network of phones or cell phones would not need to hire someone to negotiate a new contract or acquire new cell phones, but for companies that do this on a tremendously larger scale, it makes sense.
“Who actually hires MTSL to provide enterprise solutions?”
Although its market cap is still small, the firm does have a global reach. An impressive list of major companies who hire MTSL include: Lowe’s (LOW), The TJX Companies (TJX), Costco (COST), Siemens (SI), McAfee, and Aetna (AET). For a more extensive list view: http://www.mtsint.com/page.php?id=25
“So, do they make any money? How have they been doing?”
MTSL does have significant revenue which is growing and the firm is profitable. According to the most recent quarterly report, linked below, the firm beat revenue and earnings expectations for their 3rd quarter. “Year over Year Quarterly Revenues Increased 12% and Operating Income Increased 180%,” Says the report preceding the actual numbers. http://www.mtsint.com/system/b40fb8aecd5016b1d87712f547edcbc4_08112012224400.pdf
The firm is also flush with cash. This free cash flow generating machine has a strong balance sheet, which should only be strengthened following its next quarterly report in February 2013, this month. According to the report linked above, the firm has Total Assets of $10.9M, $4.5M of which is in the form of cash and cash equivalents. With only $5.9M in total Liabilities, the company is properly capitalized for business continuity and growth.
Total Revenue for the third quarter increased by 12.5% year over year, while Net Income climbed 8.4%. MTSL is primed to climb, especially considering certain aspects that effect how the stock trades.
“So back to doubling..”
MTSL only has 4.459M shares outstanding. This small company only has an average daily volume of 123,519 shares traded. Yesterday only 46,207 were traded and over the past 30 days on 3 days broke 90,000. This low volume acts as gun powder for small cap stocks. Once companies like MTSL get any momentum, typically from earnings or other announcements, the low volume and illiquidity forces pressure to the upside. As MTSL is currently in a dark period leading to earnings, noise around the stock is quiet, but once earnings are reported and growth is shown to continue, the stock has significant potential to continue its rally.
Here a writer and trader lists his prediction of MTSL surpassing $10.
I don’t disagree with him, especially if MTSL can continue its growth over the next two quarters, but this is a firm that should be bought prior to earnings, which are coming close.
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