Just read a great article:
Filed under: General SPNG— SmallCapNetwork Editor @ 7:08 am
Being in the small cap stock business for a while, I’ve seen enough hype to last a lifetime. Too many small cap companies tend to overpromise, inflate their potential, and then underdeliver. And all too often, the more emphatic the hype, the less there is to tout. The ridiculous irony in the matter is this…the companies that scream and shout the least usually have the most to boast.
It was a reality I was reminded of a few moments ago as I was scouring through Spongetech Delivery System’s (SPNG) latest 10Q. The headline read…
“SpongeTech Delivery Systems, Inc. Releases 10-QSB, for Second Quarter 2008, Highlights Rapidly Expanding Sales Growth! SpongeTech Reports Current Sales Up $331,736 USD over same Quarter ending November 2006!”
A $331K quarterly sales increase for a relatively new micro cap company - not too bad at all, right? Actually, somehow that’s a grossly inadequate description.
What’s only evident in the actual filing - not the press release - is that quarterly sales soared from $27 to $331,736. More than that, the $331K quarter was also leaps and bounds better than the previous quarter’s sales (Q1 of 2008) of $64,000…..a five-fold improvement.
Though the press release didn’t say, I have no problem saying it…that’s huge, and I think it’s only the tip of the iceberg.
What really clinched their status with me was the fact that they pushed their sales up to these levels without the benefit of the new facility, which they only moved into in the last couple of weeks. If they can do a few hundred thousand without a major facility, what can they do with a bigger warehouse? I can’t imagine that $15-$16 million backlog being a problem for the company now….I think that’s all going to go to the top line over the course of the next twelve months.
As for the stock, the company’s market cap was about $1.5 million as of yesterday’s close.
What else can I say? The stock is valued at what I think is about 1/20th of its true worth, and the company just proved the modest sales increases weren’t a fluke.
As much as I don’t like hype, if you only take away one message, I really hope it’s this - Spongetech just proved (to me anyway) they’re the real deal. They said the business was there, they said they were going to get it, and then they went out and got it. They’re on track to get even more and more of it in the future. As of right now, SPNG is my new favorite stock. I really hope you own some, and I can’t say I’d blame you for wanting to own more.
Side note: The last time we looked, the short holders were trying to filter out. If there are any remaining short positions, I think this news could drive the nail in the coffin. That’s actually good for the stock, since all that buying (to cover) could further fuel any rally.
AI
