I'm "pounding the table" on MBND @ $2...
Here's why:
1) MBND is a back-door play on the tremendous growth being enjoyed by DirecTV (DTV-$42); check out the weekly chart on DTV. Multiband is the second largest independent installer of DirecTV equipment in the U.S., accounting for approximately 20% of installs.
2) MBND is a cash-flow monster. On 5/13, MBND forecast 2010 EBITDA of $12M; on 8/3 they lifted that to $14-16M; on 8/12 it was raised again to $15-17M. And my contacts indicate that an additional forecast boost may occur before year-end. With a market capitalization of approx. $20M, MBND share are trading at just over 1x cash flow; by comparison, DTV trades at approx. 6.5x cash flow. Importantly, the MBND contract with DTV was renewed on 10/1/10 for another 4 years.
3) MBND features a staff of over 3000 trained technicians (what they call their "Technical Installation Force") who, according to management, are in 5000-8000 homes/day. MBND intends to leverage this presence/infrastructure by offering a variety of additional services and products through the Force. Current examples include flat-screen TV installs for Sam's Club and third-party internet installs.
4) While the DTV business "pays the bills", MBND sees a vast, largely untapped market in its MDU (Multiple Dwelling Units) segment. The DTV penetration into these apartment/condo buildings is miniscule in comparison to single family homes. MBND seems to be the only entity targeting MDUs, a market which the company estimates to be 30M units. So far, Multiband has just 190K, barely scratching the surface. The company has established an MDU-dedicated call center covering the 48 states, and continues to up-train its installation force to tap this market which holds "unbridled opportunity for growth" according to management.
5) Nearer-term, I'm expecting the stock to surge when September quarterly results are released. The June quarter was a blowout, with EPS of $.21. I don't expect Q3 to be quite as good, but @ $2/share it doesn't have to be. With only 10M shares out, and annualized revenues of about $260M, MBND shares offer a lot of leverage for $2.
The BIG negative in the Multiband story is the company's balance sheet, which is a mess. Several series of preferred stock and a significant working capital deficit have combined to scare away many investors in my view. However, except for one series, the preferreds have minimal conversion priveleges; and the one series that does cannot be converted until 2013 (into 5M shares @ $2). As for the working capital, the company's impressively positive cash flows are more than able pay the bills. It will take awhile, but the company has more-than-ample resources (including a recently-inked $10M equity credit line) to keep up with its bills.
Summing up, MBND is that rare ST/LT play that I run across every couple years. I think ST the stock goes over $3 on the Q3 release; LT I think the stock can triple or more from its current $2/share price.
