The Motley Fool Discussion Boards
Canadian Investing / Canada - Microcaps
|Subject: Re: MicroCap Challenge 2007||Date: 12/23/2006 5:09 PM|
|Author: TMFAdmiral||Number: 2903 of 3296|
I decided to enter Rentcash (RCS.T) as it's too small at $160 million for the Canada Challenge. It's unlikely to beat some of your high flying penny stocks, however I think that the market is missing a few things with this stock
1. It voluntarily took a hit to revenues by ceasing some of the payday practices that will almost certainly be attacked by regulators. This won't affect future growth in payday lending as # of stores expands.
2. I high proportion of the existing stores are less than 2 years old. Stores mature over 4 year period giving ample opportunity for comps growth
3. Getting rid of the rent-to-own stores (in Brick & United Warehouse stores) will significantly improve the profitability of the company.
4. By my estimation of the company as a standalone payday lender the stock could reach between $14 and $20 by late 2007/mid 2008
Biggest risk is provincial regulation which may effectively ban all payday loans.
I'm also going to enter a penny stock - Starfire Minerals (SFR.V) - in the true micro-microcap challenge. Only $6 million marketcap and entirely speculative - A friend of mine is the President & CEO, otherwise I would not be invested in this company & I'm specifically not recommending it to anyone else.