GAXC is a rapidly growing company in the ATM and DVD kiosk business that I think could be a multi-bagger over the next year. They could be the next Coinstar IMO. Here is some more information on my GAXC investment thesis:
1. GAXC just completed their first big rollout of DVD kiosks with a major grocery chain. They deployed 323 DVD kiosks and expect them to be generating net income at the start of 2011. This business is expected to generate roughly $7M of yearly revenue going forward.
2. GAXC also just acquired Tejas Video Partners which runs a DVD rental kiosk business primarily for military bases. As of the third quarter conference call they had 260 kiosks deployed at military bases. Tejas represents roughly $4M in incremental revenue and also, importantly, increases their management experience in the DVD area. Overall, 2011 revenue should be roughly 50% higher than 2010 due to their organic and acquisition growth and that doesn't include any new business.
3. GAXC is trading at a significant discount to it's book value of $0.77/share.
4. They have a big pipeline of new DVD and ATM business.
5. While the DVD kiosk business represents their current growth initiative, they are also looking at other types of kiosks for growth. For example, they currently are running a trial for video game kiosk rentals.
6. Per my calculations, I expect 2011 diluted EPS will be in the $0.16 ballpark based only on current business. Additional business may give them some upside although new business tends to take a while to drop to the bottom line.
Mike
SwingTrade is my favorite board - #board-1781
Due diligence on my favorite stocks is located on the sticky note on the SwingTrade board.
