SwingTrade Member Forum

[MikeDDKing]

New pick - VVDL - Vivid Learning Systems

I've been buying VVDL. It is the best new stock I have seen in quite some time and I believe is a potential multi-bagger. With earnings of $0.017 last quarter and likely earnings of $0.02 next quarter I think this stock is massively underpriced at $0.18. I think the stock could easily be trading at $0.50-$1.00 this year. More research is available on the VVDL board which is located here:
http://investorshub.advfn.com/boards/board.aspx?board_id=15057



Overview
Vivid Learning Systems, Inc. develops and delivers computer-based compliance training products and services, and interactive communications programs in the United States and internationally. It offers online training programs through its Web site learnatvivid.com for the general manufacturing, utility, healthcare, mining, food safety, government, and education industries.

Web Site
http://www.learnatvivid.com

Investment Thesis
1. Rapidly Growing Profits - Vivid Learning Systems has had rapidly growing profits and has had at least 5 successive quarters of year-over-year EPS improvement including fully taxed earnings of $0.017/share in fiscal Q1'09 ending December 31, 2008 In fiscal Q1'09 they had a 30% year-over-year revenue increase and a 29% sequential revenue increase.

2. Recession Reisistant Business - Their training focuses on compliance and safety issues where employers have a legal need to provide training. It is a low cost way to provide training because it is web based which is attractive for companies looking to cut costs.

3. Hiring - They had 33 employees at the end of the fiscal year which ends on September 30th. They have plans to grow the staff by 7 people according to the 10-K. According to the company they have already added half of those positions. Here is a link to their open positions:
http://www.learnatvivid.com/jobs.html

4. Growing Custom Products and Services Division - The revenue for this segment has grown sequentially for the past 4 fiscal quarters (Q1'09 = $664,492, Q4'08 = $610,884, Q3'08 = $540,564, Q2'08 = $401,542, and Q1'08 = $397,487). Unearned revenue has grown dramatically in recent quarters (Q1'09 = $228,950, Q4'08 = $100,518, Q3'08 = $49,471). Unearned revenue is primarily associated with their Custom Products and Services Division. The large increase in unearned revenue indicates that they likely will have a significant increase in revenue in the Custom Products and Services Division in fiscal Q2'09.

5. Growing Training Subscription Division - The revenue for this division grew 18% year-over year in Fiscal Q1'09 and 72% sequentially. Additionally revenue for this segment grew 7.1% in the prior four quarters vs. the four quarters prior to that. Their subscriptions are annual in nature and are renewed yearly by roughly 80% of their customers.

6. Growing Library of Training Products and Partnerships - They have been rapidly adding to their library of training products. Furthermore they have been developing more partnerships. I believe that has been driving some of the recent growth and will drive growth going forward. See the press releases on the VVDL board for more details.

7. Estimated Q2 Earnings - I'm expecting fiscal Q2 earnings (ending in March) to be in the range of $0.012-$0.025 with a likely number of $0.020. I believe both Training Subscriptions Revenue and Custom Products and Services Revenue will grow sequentially.

8. High Gross Margins - Last quarter gross margins were 62.2%. Additional revenue drops rapidly to the bottom line.

9. Insider Purchases - Insiders have been purchasing shares heavily since September including purchases by the CEO and two directors. Executive Officers own in excess of 35% of the shares.

10. Healthy Balance Sheet - They have book value of $0.26/share with a big increase in cash in fiscal Q1'09.

11. Small Share Count - As of Feb 12, 2009 13,272,165 shares were outstanding. At Dec 31, 2008 581,638 options were outstanding with an average exercise price of $0.33.

12. Fortune 500 Customers - They have a very impressive client list including large companies such as Microsoft, Anheuser Busch, Ingersoll Rand, 3M, ConAgra Foods, Del Monte Foods, McDonald's, Perdue Farms, Lawrence Livermore National Labs, and many more.