iQSTEL Inc (IQST)

[Televet]

iQSTEL: A One-Stop Shop For Trending Technology
Jul. 13, 2021 6:09 PM ETiQSTEL Inc. (IQST)

https://seekingalpha.com/article/4439068-iqstel-a-good-speculative-buy?mail_subject=iqst-iqstel-a-one-stop-shop-for-trending-technology&utm_campaign=rta-stock-article&utm_content=link-2&utm_medium=email&utm_source=seeking_alpha

Final Thoughts

I consider iQSTEL a speculative buy at these levels. They have a proven core business with telecom that is near to profitable, and with better margins, I believe it could be profitable all on its own. Being mostly debt free and able to generate funds from minor stock sales only strengthens that possibility, and lessens the risk that an unfortunate event becomes more serious.

Also, new investors should be aware that management locked up 21 million of their own shares as announced in December 2020. These shares were locked for one year, and another year was set for leak out. This may be dilutive over a longer term, but the lock out/leak out allows for less effect on market trading. It may also be taken as a measure of confidence by management in what they believe the future value of their stock may become, and it shows they have tools available to lower the shares in float.

It's worth noting that the company has expressed many times its desire to up list to a major exchange such as the Nasdaq. The stock share price briefly reached levels that would help bring that to a realization earlier this year prior to a pullback, which appeared to affect many OTC stocks. In the meantime, iQSTEL applied for an upgrade from being a Pink Sheet stock and was recently granted designation as OTCQB, which is the next highest tier in OTC, and comes with a level of requirements superior to the Pink Sheets. This lends its own measure of credibility for the companies that achieve the status. Subsequent to the new status, iQSTEL has since appointed an independent advisor to the board as part of its strategy to meet NASDAQ requirements. With this focus on further up listing, I expect that iQSTEL will make its best efforts to not diminish shareholder value, and rather, do what they can to increase shareholder value as this is crucial to reaching their up list goal. The move to positive shareholder equity in the first quarter was a step in the right direction.

I have a considerable long position in iQSTEL. I rate this a speculative buy due to so much of the business plan being in early stages. Keep in mind, however, that the current valuation stands well with the telecom portion of the business on its own. For the investor that should mean that a new position at the current levels should stay valid even if one or even all of the new products iQSTEL launches ran into a less than stellar launch. In short, with iQSTEL at the current price, you can have a small telecom company, with growth opportunity, and get all the new products along with it essentially for little of nothing.

The current revenue forecast was set at $60.5 million, which looks nearly doable, if not more than doable based on the telecom sales shown for the first quarter. New product revenues then provide the possibility of beating the revenue forecast. The gross margin is something to keep a very close watch on. We see that the telecom business has room for margin improvement, but all the new products are considered to be high margin such as in a 30% to 40% range and all the company's new products have the potential for widespread use. More revenue with higher margins can be transformative.

We all know of companies that are rolling out a great product that isn't profitable "yet." Sometimes these are in trendy new investment categories and trade at 5, 10, or 20x revenue. For whatever reasons, maybe the market hasn't anointed iQSTEL the brass ring of confidence in its new products, looking at the current multiple between 1 and 2. The bottom line for the investor is the business holds its own at this stock price, which should imply a limited downside risk, and the upside potential is stellar. If none of the new products happen, you still have a growing small telecom. There are plenty of ways the company could falter, but revenue is up and gains are rapid, margins are improving, shareholder equity is improving, and new products are already being sold since the last financials were filed. And, more new products to come. When I looked up the definition of a speculative buy, "appear to have great potential that is not yet realized," I could almost see iQSTEL in the sentence.