Value Microcaps Motherboard

[whyme2005]

WSCI $3.8..THREE DAYS AND NEW 52-WEEK HIGHS

WSCI (2M share Float...$10M market share) will report blowout earnings within 3 trading days.

Target: $7 after earnings

......So, why are we not seeing a pre-earnings rally yet??

WSCI always behaves like this prior to earnings. Take a look at what happened prior to the 3Q blastoff.....same pattern. Investors are like sheep..they'll be chasing this puppy and pushing it to new highs next week when they can pay cheap prices today and enjoy the big ride. Just watch.

http://stockcharts.com/gallery/?wsci

Some observations:

1) WSCI share prices has experienced an steady uptrend for over a year with several big spikes after every earnings report (lower chart).

2) Each successive earnings spike is bigger than the previous one ( See 3Q's in June 2005).


Here are a few reasons for 1 above:

a) WSCI relocated to a larger and more modern manufacturing plant to accommodate increased demand for its products.

b) WSCI has been gaining larger and larger projects from Polaris. The biggest one, and the one with the greatest potential long term, is for manufacturing critical engine parts for Polaris (PII) Victory Motorcycles. Polaris reported today a 45% increase in revenues from its Victory motorcycles. PII forecast double digit growth for Victories for many years to come. Harley Davidson Motorcycles reported record earnings this week confirming that trend.

c) WSCI is focused on diversification. The company announced in June 2005 that it has secured a large project with a biotec company that will increase revenues by about 10% over 12 to 18 months.

d) WSCI received ISO certifications recently that will enable the company to able to compete in more diverse markets than before.

e) Net income was adversely affected for 4 consecutive quarters during the relocation. The first quarter not affected by relocation costs was 3Q 2005. Net income in 3Q was a strong 7c/share

f) Revenues have increased steadily for several quarters.

A few reasons for 2 above:

a) As net income increases with every quarter, the base after each successive earnings spike is higher and higher.

b) Since 3Q was the first full quarter not affected by relocation costs, its earnings spike was the biggest one. The share price was not able to remain high because the CEO stated that revenues would likely be "somewhat lower" than the record $4.2 M reported in 3Q. I believe investors misunderstood the CEOs comments and think that 4Q 2005 will be closer to $3 M than to $4 M. My estimate is that WSCI revenues will be close to $4 million in 4Q

My experience with growing and profitable low floaters like WSCI is that they need two consecutive big quarters to break away from under $5. I believe that WSCI will report the "next big quarte" in a few days......not only that, but WSCI will report record yearly revenues and net income as well.


Here are my estimates for 4Q and FY 2005 earnings results:

** 4Q and FY 2005 Earnings Estimates:

-- 2005 Revenues of about $16 M or almost 40% higher than the $11.4 M posted in 2004!!

-- 2005 net income of about 16c/share compared to 1c/share in 2004!!

-- 4Q 2005 revenues about 30% higher than 4Q 2004

-- 4Q 2005 estimated net income of about 6c/share compared to a loss of 4c/share in 4Q 2004.



OK, so 2005 will be a record year for WSCI.

2006 will be even a better year. I expect net income to be about 25 - 35c/year in 2006 for a few reasons:

1)The company will not have to spend the $348,000 it spent for its relocation to the Monticello plant during 1Q and 2Q of 2005.

2) The new contract with the biotec company will kick in in 1Q 2006 (10% increase in revenues...or about $400,000/quarter).

3) New ISO certification will open doors to new projects with existing and prospective customers.

4) Strong and growing Victory motorcycle sales. Steady and moderately growing ATV worldwide sales.



Do your DD before it is too late....