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June 28, 2017
Dear william,
A new dividend payment makes our Top Pick very attractive, and our contributor has added a new Mid-Year Top Pick.
Top Picks Update
Optex Systems (OPXS .095) & (OPXXW 0.31)
From S.A. Advisory
Optex Systems (OPXS) & (OPXXW) The common shares were our stock pick of the year featured in the Wall Street’s Best Investments newsletter in January 2017.
Recently, the company declared a cash dividend of .08 during the next 4 (.02/q) quarters for both the common & common stock purchase warrants. We firmly continue our recommendation as we look for even greater appreciation short & long term.
Not only looking for capital appreciation, but now we have a very juicy dividend that serious investors should not overlook while we wait for corporate growth. The company is certified ISO 9001 2008. OPXS manufactures optical sighting systems for DOD. It provides these systems for Abram tanks, Bradley's, LAV & SAV & the Stryker family of vehicles. OPXS also manufactures periscopes, rifle & surveillance sights & night vision optics.
We rate both investment vehicles with a Strong Buy, but strongly favor the warrants because of the super juicy 26% yield. The warrants are non-callable, expire 2021, exercise price is $1.50 (only .50 out-of-the-money). The available leverage owning the warrants offer the "cherry-on-top" scenario.
Management and the corporation have recently purchased large blocks of stock. The corporation has also retired a large block (700K shares).
Business has been booming for both the DOD & the consumer side products. Current backlog is around $18 million and sales for current year should easily reach $20 million. At present, there are 10 million fully diluted & outstanding shares.
If you desire exceptional yield, amazing leverage, short and long-term capital appreciation, then OPXXW is the only "pick-of-the-litter"!
William Velmer, S.A. Advisory, www.saadvisory.com, 949-922-9986, June 24, 2017
New Mid-Year Stock Pick
Quadlogic Control Corp (QDLC 0.855)
From S.A. Advisory
Quadlogic Control Corp (QDLC) is the only automatic meter reading (AMR) provider in the US that develops, manufactures & sells digital electric interval, "smart" meter & metering systems. Recently QDLC has begun reporting (visit www.quadlogic.com/investor-relations/ for all current income/balance sheet statements).
The company has been awarded two very attractive royalty agreements during fiscal 17 and fiscal 18 (ending February). Due to these contractual agreements, we anticipate earnings for last year results to be released soon. We estimate earnings of around $0.12/sh and $0.30 for the current year.
Management has change their tune and now plan on filing consistently on a quarterly basis. This is happening because 1) profits are going to increase dramatically; and 2) a group of investors has filed a proxy in order to create a new and independent board of directors that either want to sell the company or become more transparent, due to the depressed share price. Based upon the current share price of $0.70 & earnings est. of $0.12 for last year and this year’s estimate, of $0.30, the PE is 5.8X and 2.3X, respectively. (11.3 mil shares outstanding).
The proxy fight is extremely bullish for shareholders, in our opinion. The company is currently bidding on a series of huge contracts in Mexico for fiscal 2019.
We believe that situation has the potential to advance dramatically during the next 12 months. We have a $2.50 target—a huge potential based upon the current depressed share price and fundamental variables.
Finally, the proxy statement released to current shareholders is rattling the nerves of the current management team and board of directors. Changes are in the wind and risk tolerant investors should consider this opportunity.
We are extremely bullish towards QDLC and have placed a strong buy recommendation for short- and long-term capital gains.
William Velmer, S.A. Advisory, www.saadvisory.com, 949-922-9986, June 25, 2017
WSBI Editor’s Note: While Mr. Velmer’s picks are speculative in nature, he holds a very compelling track record. His January 2016 Top Pick—Hemacare (HEMA)—was recommended at $0.44, and is now trading at $2.65. He continues to rate the stock a strong buy, and by year end, anticipates a share price of $5.00.
