25 January 2007

Hello members,

Well, today is the big day of the 4th stock pick. (REMEMBER THIS IS NOT A RECOMMENDATION! I AM JUST STATING THE STOCK THAT I GOT INTO ETC..)

The Stock I picked is ATSI Communications Inc. (ATSX) (Even though the company's name is ATSI THE SYMBOL IS ATSX SO PLEASE WATCH THAT!)

The stock trades on the bulletin board. You go to yahoo finance in ATSX for the symbol it will give you ATSX.OB.

I purchased 17,500 shares at .23 for a total purchase of $4025 (Not including commissions)

The company deals with VOIP and their sales have been exploding upwards the last year +. Their 2nd quarter ends on Jan. 31st. They could come out after the quarter ends with a preview of what the revenue will be. They may even have earnings which would be HUGE!

Their 1st quarter they had positive cash flow and revenue of $6.5 million. For all of last fiscal year they did under $15 million in revenue. Conservatively they should do at least $25 million in revenue this fiscal year. Probably closer to $30+million but I like to be conservative. They currently have a market cap of less then $5 million.

They have about 20 million shares outstanding but they are continuing to print more and more which is one of the drawbacks to this stock. But I figure even if they have 25 million shares outstanding and earn $25 million in revenue if they get a 1 to 1 Price/sales ratio that would be a $1 stock. Of course for this project I would get out below .50 so I only need 1/2 that. So their is room for this to move.

The stock looks to have some support in the .20 range but if it breaks that could go as low as .13. I don't have a stop in place but I would be more worried if it fell below .20 and was in the teens.

A couple things that could drive the stock lower.

  1. If the revenue slows dramatically and they lose clients.
  2. If they can never turn a profit.
  3. If they just continue to print more and more shares. (This I think would be the most likely of the 4 options but I have added an additional 25% to the outstanding shares now for a cushion. And even if they had 30 million shares trading at .50 would mean the company is worth $15 million market cap which if the company has revenue of $25-$30 million and is earning a couple cents a year and growing at 50-100% it would still be worth it.)
  4. They have some debt they need to get rid of but with a profitable company they can do that.

The management team seems to care about the shareholders and are running a lean operation. They have less than 10 employees but can generate that kind of revenue! It is a low margin business but with the growth things look to be turning up.

The stock price was up to .35 back in Nov-Dec of 2006 and has fallen back. I think with a good release on 2nd quarter #'s especially if they can turn a profit even of .01 this stock will really move.

Here are the other 5 stocks that were in contention for my Stock Pick. They are in No particular order. (I look through 100's and 100's of stocks. I narrow it down little by little usually to a group of 20-30 after a while than really go in-depth. I than narrow it to 5 and out of the 5 I pick the best.) I have always included the other 4 stocks in the original email. The first stock pick back in October 05. 3 out of the 4 other stocks ended up doubling the other stock went up 75%. The second stock I picked back in May 2 out of 4 are DOWN 1 is up 25-30% and the other is up about 10%. So out of the 10 total stocks I listed 5 doubled 3 went up but not doubled and 2 are down. (JUST FOR YOUR INFO) Also the Oct 13th 2006 OTHER STOCKS did VERY well you can check those out as well.

In random order! (I do not own any of these following stocks or plan to unless otherwise noted. Stock symbols are given with January 25th closing price.)

ETLT (.65) This was an "OTHER STOCK" back in October with our 3rd pick. It made the list this time as well as it was the only one that hasn't made a big run yet. And since I own some shares of the stock. (I will exit this stock if it goes below .55 or .90-$1 whichever comes first.) If their story is TRUE this is a stock that can run big. They have huge cash about 1.30 per share. They are making good money. Could they be cooking the books a foreign company and on BB not always easy to get great info. The story is GREAT. Only real question is are they cooking the books and you don't know that ever until something bad happens. They also have a problem with issuing more and more shares. Again I have a small position for my own account NOT TO DO WITH THE STOCKDOUBLING PROJECT. I will exit the stock if it goes below .55 or exit the stock if it goes into the .90-$1 range.

SNMO (.80) Very hard stock to find good information on. This stock is WAY off its highs and like I said I don't have a lot of information on it. The revenues still look they are decent and they are earning money. I don't know how many shares they have outstanding etc.. But thought I would put it in here.

CBMX (.79) The book value of this stock is right around .80. This is a stock strictly based on the chart. Lots of negative chatter on it. But if it can hold the share price above .70 it has good potential if it drops below that its a DOG and I wouldn't touch it.

ALDA ($15.25) Just announced a dividend though it is a small one. Only amounts to 4% a year based on current share price. They have a good P/E ratio of about 7. Company just announced the dividend 2 months ago based on financial performance so they think it will continue to go well. Great support for the stock in the $13.50-$15 range. So good risk/reward for the stock. I wouldn't like it below $13.50 on a chart basis. Sales aren't improving dramatically though. So it may take a while to get to $30+ but I think $20 isn't out of the question in shorter time frame.

GV ($1.16) Good support for this stock in the .85-$1 range. They have already earned .12 EPS for 9 months this year. Assume they do .03 in the 4th quarter that would be .15 EPS for the year. At 15 x earnings that is a $2.25 share stock or basically a double. Book value is around $1 and they have grown revenue for the year by about 30%. A very nice looking stock.

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Thank you
Steve Hoven

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