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Canadian Investing / Canada - Microcaps


Subject:  Re: MicroCap Challenge 2007 Date:  12/23/2006  5:09 PM
Author:  TMFAdmiral Number:  2903 of 3296

Hi Sahfee,

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.

Starfire h