"Q" Watch - Stocks About to Exit Bankruptcy

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VSTNQ - This may just be one of those Qs...

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Hype True Or False?? VSTNQ 3/6/10
Submitted by admin on Sun, 03/07/2010 - 00:02
VSTNQ - Visteon Corporation

With action in VSTNQ that has got all of the penny stock world talking we figured we'd give you our 2 cents. In case you are unfamiliar with our "Hype True or False" articles, here's our track record of all of the articles that we've released. XMDC at .010 (FALSE), VKNG at 1.05(FALSE), ECTE at 1.90(FALSE), and ZVTK at .0044(TRUE). Needless to say we've been correct on all of our articles and we're looking to keep up our reputation with VSTNQ.

Let's start with what sparked this move for VSTNQ, because two weeks ago it was trading around .06-.08 and now all of a sudden it's now at .88, it was the release of their 2009 financials, and these were nothing to scoff at. When a company with a market cap of $10 million comes out with a PR saying that they just profited $128 million then of course this is going to go off the charts. But the question is has VSTNQ become overvalued all of a sudden? Or is it still a bargain to pick up shares under $1?

With earnings of $128 million and a current market cap of $115 million the P/E ratio is under 1! That wasn't before the move, that is now! But the fun doesn't stop there. Their net income was up $809 million from the previous year, so they are growing. And because of the fact that they reported $276 million in earnings for 4th quarter we can assume that they were on track to lose approximately $150 million for 2009, until they had their monster 4th quarter! So let's assume that can continue making that $276 million every quarter in 2010, which isn't really too much to ask, is it? Then they would have a profit of about $1.2 billion for 2010. So if this is still trading at .88 by this time next year the P/E would be under .1, which would mean the price would have to go up 150 times just to get to the average P/E ratio (of 15)! And .88 times 150 is $132 per share! So correct us if we're wrong, but according to those 4th quarter numbers VSTNQ should be trading over $100 per share at least by this time next year.

But let's not get ahead of ourselves. We forgot to take into account the $1.1 billion that VSTNQ has already in cash balance, so factor that into the equation and things are looking even better. They even said in their latest financial report that their business has been more diversified than ever before in this past year, but the best part is who they are working with, corporate giants like Hyundai and Ford.

This all being said it is clear that VSTNQ should not be a penny stock any longer. The hype is TRUE.

In the short term we see VSTNQ realistically reaching $2 per share, although it's always nice to think about that $132 number.

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