DCM marches steadily onward to $1.00 per share

Data Communications Management (DCM) reported it’s Q1 results on May11.And the story told is the same as reported in my blog of March16,2021 on Blogdaleup.Revenues have plateaued. So has it’s adjusted EBITDA and net income.But DCM has managed to pare down it’s debt by 15% to a manageable $41 million.Also it has picked up new customers in the medical marijuana industry.And this appears to be a growing revenue area.There has been no mention of the revenues or profitability of it’s Econometrica business.This blog be;lieves that this is a slow and stradily growing area with a substantial amount of repeat customers.But there can be no doubt that the pandemic has had a negative impact on it’s growth of revenues.And little doubt that revenues in the next three quarters will exceed the last quarter.

Tighten the Bolts

Revenues have plateaued and DCM has pared down it’s business expenses.Consequently e.p.s. at $.06 per share has remained constant in this difficult quarter.Slight relief is expected for the second and third quarter.The fourth quarter should show an uplift in revenuesand earnings.Still ,based on this quarter, annual e.p.s. will likely be in the $.25-$.35 area.DCM has one of the lowest price/earnings ratio on the TSX at 3.7 times earnings.A slight improvement in the P/E ratio to 4.5 or even 5 times will put this stock well above $1.00 per share.It has fallen to the $.90 price range recently but this blog believes that it will steadily march towards $1.00 per share by the summer.

Any Acquisitions ?

Data Communications Management appears to be a conservative,yet solidly, managed company.Although they have very few outstanding shares on their balance sheet they don’t want to use shares at $.90 per share when they may soon be at $1.25-$1.35.Instead they use debt and gradually pay it off.So that now their debt/equity ratio is reasonable.However there are one or two small companies available that could add to their product line.These two are Fandom Sports (FDM) with a market cap of $7.5 million and iSignMedia Solutions (ISD) with a market cap even smaller.It should be easy to take on a little more debt and buy a majority interest in either.This would add to revenues and perhaps push DCM quicker into the $1.25-$1.35 price range. https://www.woodbridgegroup.com

Blackline relies heavily on Exports to make record Q1 revenues

Blackline Safety over the last year and a half has built up it’s European revenues.It seems to have a solid base in the U.K. and now is adding a subsidiary in France.It’s latest quarterly report shows record revenues of $11 million and substantial recurring revenues (from repeat customers).But adjusted EBITDA went from $520,000 to a $364,000 loss and net income showed a net loss of $.09.

There were 4 or 5 blogs on both Google Workathon (dated June6,2020 and August7,2019) as well as on Google Blogdaleupsome (dated July23,2020 and March1,2019) suggesting that BLN needed to increase revenues.And it has done so and appears chiefly by having made some clever strategic acquisitions also.But net income has not yet kept pace.

Acquisitions

Blackline Safety has made substantial gains in revenues since 2018– both in total and recurring revenues.In 2018 BLN had $18 million in annual revenues and in 2020 it made $38 million.And in this quarter it showed total revenues of $11 million.So it is on track to hit $45-$50 million annual revenues for 2021.This gain has come partially from acquisitions.My blog on Workathon dated June6,2020 recommended an acquisition of a company called Awesense which is in energy monitoring.A later blog on Blogdaleupsome on Google Blogger recommended a merger with one of their suppliers called Nevada Nano which makes gas detector sensors.And it seems now as if some kind of combination has been arranged.Whereas Blackline tells shareholders itself that it has acquired a British firm called Wearable Technologies.The latter firm sells almost exclusively in the British and French market.Plus BLN has made an arrangement with a British firm called Enovert where it appears that it shares in revenues.Furthermore Blackline sells a lot of safety gas sensors and monitors into the British market.

Adjusted EBITDA

Small junior technology companies rarely make any substantial net income in the first years of operation.And BLN also showed negative net income.But most do earn positive adjusted EBITDA in their third or fourth year and usually it is growing.BLN made adjusted EBITDA of $520,000 in Q1 of 2020 but showed negative adjusted EBITDA in the latest quarter of $360,000.Blackline told shareholders that their adjusted EBITDA margin rose a few points.But it looks to this blog that operating expenses rose even more.This cannot be confirmed because Blackline does not provide information on it’s operating expenses.And shareholders do need to know more about their operating expenses.

Price Target

BLN management has taken the recommendation of this blog ,and others, to increase revenues and recurring revenues.But it appears now that expenses are rising too fast because Blackline has too many new projects and acquisitions at the same time.This blog expects that the adjusted EBITDA margin on it’s European operations is not nearly as high as on it’s domestic operations.It is possible that BLN revenues will hit $45 million on an annual basis but only show a small EBITDA.Blackline must show shareholders that it can control operating expenses and so generate at least a small adjusted EBITDA for 2021.Still investors must be impressed with it’s growth.So, in summary, if revenues continue on track and operating expenses show more constraint a price range of $8.50-$9.75 is not out of sight by the fall. https://www.zacks.com/

Data Communications Mgmt.needs new eggs in the Easter basket

Data Communications Management needs to start sitting down with several new future partners.And it has in it’s basket a few eggs (partners) that are no longer so tasty.The reason that I say Easter basket is because DCM needs new partners and products soon; so Easter would be appropriate.And that is because since 2019 it’s revenues have stagnated (between $60 and $70 million each quarter).Although it is also true that they have picked up a few quite tasty partners.So,in summary, their revenues have plateaued but their margin has improved.So adjusted EBITDA has improved although revenues remain level.

Back in 2018

Revenues have been pretty constant since 2017.In 2018 DCM acquired 2 or 3 small printing companies.They were not extremely profitable but they picked up a few government contracts every year.This stabilized revenues and produced a medium amount of adjusted EBITDA.Since then Data Communications has acquired two or three more technology oriented companies.In fact, this blog suggested acquiring Informetrica,an Ottawa based information provider, in 2020.These recent acquisitions have improved DCM’s gross margin and it’s adjusted EBITDA.As this blog title suggests, now would be a good time to interview new partners in order to make another one or two acquisitions. In particular, acquisitions that complement their recent technology subsidiaries.At the same time some or all of their printing companies acquired back in 2018 could be divested.

Informetrica Plus

My website on Google Blogger called Workathon, in a blog dated August23,2020, set up a meeting with an Ottawa information provider called Informetrica.This same blog on Workathon recommended a merger or even a complete acquisition by DCM.There is no mention of a merger in the quarterly reports but DCM has increased it’s debt in 2020 and it is very likely that Data Communications has taken a major position or even acquired the failing Informetrica.This opens up new services and new skills to DCM.But this blog believes that these services must be expanded both with new hirings and new acquisitions in these new service areas.If necessary some or even all of their low margin printing companies should be divested in order to help finance these actions.DCM needs to be seen as a progressive,technology stock with a high gross margin.This will increase it’s P/E ratio and enhance future equity issues.As Data Communications still has very few outstanding shares and needs to use more of it’s capital base.

Summary

Right now the debt/equity ratio is high as it is above 1.So DCM is financing it’s expansion with too much dependence on debt because interest rates are low now.But with a prudent acquisition their revenues and earnings will rise and the stock price should move towards the $1-$1.25 area.Data Communications may be able to make one or two new equity issues and reduce their debt also.This will put them in a much stronger position in the second half of 2021. https://www.zacks.com/

VQS checks out Cdn. partner

VQS is an American “small cap” that uses artificial intelligence (AI) to transcribe and copy largely legal documents.It is starting to use AI more consistently in it’s operations.And so it should be intewresting for it to meet another “small cap” in the AI field.Such a company would be NexJ.Iam inviting 3 officers from each company to meet in Oakville at the Oakville Inn for the weekend (Fri.-Tues.).All travel and accomodations are paid for.

There may not be any combination or merger involved here.Just a chance to see how AI is used and can be improved upon.I will ask R.H. to send a consultant over for this weekend at the Oakville Inn.I need notes for each and advice given to both companies.This consultant should be tops in his field in order to do that.I offer him $7500 for the weekend and giving out meaningful advice. www.www.RobertHalf.com

Sangoma Technology needs to try out a few new Tools

Sangoma Technology(STC) has a lot of cash on hand after it’s latest $80 million equity issue.And this blog believes that it is on a threshold.If it does not continue to grow revenues and earnings it will fall behind others in this competitive field.So this blog has a plan to grow STC successfully.A plan has been hatched to meet some potential suitors in this field.The candidates are Data Communications Management (DCM),CIK Telecommunications and Electronic Box .The meeting will take place this weekend at Hockley Valley Resort near Orangeville,Ontario.Sangoma has reportedly up to $93 million in cash and may be willing to part with some of it if they see the right product and the right fit.I will ask R.H. to send a telecommunications consultant for the weekend.I offer $5000 for advice given to all participants and a one page note on DCM and one page on CIK and one page report on Electronic Box given to STC management.The note will address synergies between those companies and STC.The consultant will get another $2500 to look at the combination of DCM and CIK Telecommunications.Here a 2 page report will go to DCM to show how the fit benefits to DCM.In all cases the consultant will offer a price for the company to be acquired.The consultant will be offered a $5000 bonus for any successful combinations. www.sangomatechnology.com

Aimia remakes Itself

 

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Pexels.com

   Aimia is a company that has been covered both in my Blogdaleup(WordPress) and Workathon-Blogger (Google) blogs.And as many people know it used to own and administer the Aeroplan program that handled the loyalty and award program for Air Canada.But that has come and gone and Aimia is making a good job of transforming itself.Like in the picture above it will take a lot of work to see Aimia return to it’s old price levels.But right now,with the pandemic,it looks like Aimia got a pretty good deal for Aeroplan.However in late 2019 and early 2020 it appeared that the Aimia board abandonned it’s shareholders

untitled

  New Board and New Activities  

The Aeroplan award and loyalty program had been once valued at $2.5 billion;Aimia owned it completely.Air Canada wanted to end this long running contract unilaterally by June 2020.It offered $450 million for Aeroplan and the board accepted the offer.This blog encouraged Aimia board to break the contract citing duress.At that time two banks backing the program offered $500 million for Aimia to continue the program.This blog advised Aimia to take on partners and accept a deal with the banks.To be clear Aeroplan represented Aimia’s future.When the deal was finalised this blog called for the board and CEO to be replaced.At the time there was little controversy over the ill-begotten sale.But eventually law suits emerged and a new board and CEO was put in place.Now the Mittleman Brothers, a significant shareholder, controls the board and is the CEO.

      With the loss of Aeroplan, Aimia was faced with a reduction and unstable source of revenues.This caused the Aimia board to decide to eliminate the dividend. Consequently the share price dropped to as low as $1.80 per share.This blog felt that accepting the deal with the banks and other partners (like Porter Airlines) could have saved the dividend or only reduced it.And it was the sudden drop in the share price that lead to lawsuits and a change in ownership.

    New Activities

   The former Aimia owned or managed a number of Airmiles’programs including one in Mexico called PLM and a small stake in an Asian loyalty program. The Mittleman Brothers are an American investment holding company and a substantial shareholder.They had every right to sue Aimia.They did so successfully and replaced the board and CEO of Aimia.So the new Aimia is a merger of Aimia and Mittleman assets including a new 49% stake in a loyalty company called Kognitiv.And to top this off Aimia just received a $67 million payment from Air Canada related to the indemnification of Aeroplan obligations.                           Snapshot 1 (04-09-2014 8-43 AM)

   Alternative Paths

            This blog feels some pride in Aimia remaking itself as well as the rebound in price from as low as $1.80 to the $3.50 level.If someone had not reacted to this blog’s call for a new board the stock may have stayed at the $1.00 to$1.50 level.Now that Aimia has shown staying power it is even possible that future contingencies will be paid from Air Canada.But this blog feels that Aimia has too many scattered investments and there should be some consolidation.One or two assets could be divested now and a return to loyalty programs such as their new asset Kognitiv Loyalty.This and the hope of a small dividend in 2021 could send AIM as high as $3.75-$3.95.

https://www.zacks.com/

Investing in a good Reit ETF – XRE

Lighthouse

   This website handles my new and exploratory topics.Since I have never discussed ETFs before;this is the best place to look at XRE- a real estate Reit ETF.a An ETF is made up of a  number of companies-not just one.The ETF weights the average- higher for preferred companies and less for those not as preferable.A good reit must see the movement in real estate markets well before the average buyer or seller just like the man in the lighthouse above.In times of change some holdings will be sold and some bought to reflect changes in the marketplace.In other words the weighting of companies in the ETF changes.           HPIM4349 (2)

    Looking at XRE

XRE is not an average of real estate companies;it is a weighted average of reits.3 companies make up about 40% of XRE.They are CAPReit (15.45%),Riocan Reit(12.25%) and Allied Properties (12.02%).7 more reits comprise a further 37% as they have a lower individual weighting.In other words there are a lot of fruit and vegetables in the wheelbarrow but some take up more room than others.The yield on XRE is about 6.6% now and that is a weighted average of the companies in the ETF.In addition, XRE is cheaply priced with a P/E ratio around 10 times.

    Price Movement

    XRE is not one of the top 3 reit ETF performers in the last 3 months but it is considered to be a good performer over the next 2-3 year period.Chiefly because it is a low P/E ratio at 10 times and a quite healthy yield at 6.6%.Still it fell almost 40% over the last 3 months.But the 3 foundation companies which make up 40% of the ETF have good growth prospects – ,especially CAR.UN which makes up 15.5% of the value of the reit.

      However,at this time all reits are suffering from the downdraft of the market in general.Although it’s 3 foundation companies-CAP Reit,Riocan and Allied Properties have performed well over the last 18  months they too have succumbed to market conditions. As a consequence the XRE price has dropped from $21 a share 3 months ago to a low of $12.Now it has moved up slightly to $14.25 and it’s P/E ratio is still a reasonable 10 times.

      Looking Ahead

      XRE will likely move with the market in general over the next two quarters.As it’s beta is only 1.15 which means that it moves in tandem with the market.And this blog believes that reits will outperform the market in general.It’s three main components,that is,CAP Reit,Riocan and Allied Properties will provide above average growth.And it’s yield at 6.6% is very attractive in this low interest rate environment.This blog looks for XRE to slowly move up to the $16-$18 area by yearend.This is still below it’s 52 week high of $21 per

   share.  https://www.goodblogs.com/

Aimia shows partial recovery from loss of Aeroplan

pexels-photo-872957.jpeg   On February 25 Aimia,a loyalty solutions company, released it’s fourth quarter  results.There was no information given on annual results as of yet.Earnings per share (e.p.s) went from a loss of $1 after the loss of Aeroplan to a gain of $.20 this quarter.Partly explained because operating expenses were down almost 50%.Still adjusted EBITDA showed a $13 million loss.More importantly for the future direction of Aimia the release states that the reconstitution of the Board is effective today.That should mean that 4 board members will be replaced.Jeremy Rabe was thought to be one of the four but is still acting as CEO.He presided over the board when the terrible settlement for Aeroplan took place.It is a terrible settlement because 2 or 3 Canadian banks (chiefly  the TD bank) were willing to pay the entire amount of the proceeds  from the sale in order to keep using Aeroplan.This would have kept Aimia with possession of Aeroplan.Consequently he does not according to this blog have the dynamic makeup required to move Aimia to the $5 per share area that shareholders are  expecting.And this blog would like to see him moved to a lower management level. It is possible that Jeremy Rabe has the detailed knowledge required to admininster Aimia’s programs but not to lead Aimia.

        Quarterly Highlights

  The main concern of investors is that e.p.s. went from a$1 loss to $.20 gain.However revenues were down 5% from Q1 in 2018.Consequently adjusted EBOITDA still showed a $13 million loss.On the other ahnd Aimia made a 50% reduction in expenses.They reduced office space and their total presence in several countries.Aimia really tightened up it’s operation.Employees,for example, were 750 at the beginning of the year and 520 last quarter and now only 450.               WIN_20160623_19_56_05_Pro

     Jermey Rabe, the CEO, says that “AIMIA is placing a sharper focus on it’s core capabilities”.As a result it is substantially decoupling from Aeroplan.Consequently it has new consulting contracts with South Africa and U.S.A.And it has put more investment into the Air Miles Middle East program.

   The Second Half

         This blog foresaw a dismal 2020 after the loss of Aeroplan as discussed in my blog on Google-Blogdaleupsome.com on August 31,2019.That blog was entitled Living without Aeroplan.It called for legal action to restore some kind of equity in what was a semi-illegal action.But results from Q1 are a step in the right direction.

   This blog sees little change in Q2.Likely  e.p.s will be $.15 to $.25 in Q2.But shareholders should expect a slight deviation in company direction by the second half of 2020, especially if Jeremy Rabe is moved into a lower administrative position.This blog has said before and continues to say that Aimia needs to look at further legal action on Aeroplan because of the unusual situation.That aside Aimia still is on course to hit $.75 to $.90 e.p.s. for 2020.And with a normal P/E ratio this should send the stock price to $5 by summer.   https://www.otpp.com/home

Cargojet begins to Take Off Again

untitled  This is another of those technical matters best covered on my Blogdaleup website. The company examined here is Cargojet.”Cargojet is Canada’s leading provider of time sensitive premium overnight air cargo services.”It carries more than 8 million pounds of cargo weekly.It has been around for a few years but has garnered more attention recently.However the stock price has moved up steadily since 2016.It traded at $25 in early 2016 and at $50 in January 2018 and now trades at $100. It is getting more attention recently as it got a nice bump in the stock price in September,2019 when Amazon made a deal with Cargojet.

   The Amazon Deal

       Amazon and Cargojet seem like natural partners;online ordering combined with overnight on-time delivery.Apparently Amazon thought so also.So they offered to buy 10% of Cargojet and Amazon promised to ship 400 million pounds of cargo in return.This is roughly equal to one year’s shipments since Cargojet delivers 8 million pounds a week.This is a lot of new business and could double CJT revenues if delivered in the first year.In addition, if Cargojet meets the performance requirements of this deal there will be a further 200 million pounds.Revenues only increased by 16 to 24% in Q3 2019 but are sure to increase by more than this in Q4 and throughout 2020.The Amazon deal virtually guarantees that.

       The  Plateau

          The Stock Price is on a Plateau

    When the Amazon deal was announced (in September,2019) the stock price jumped to $105.50 but has fallen back  in October and November to the $95– $101 area.On November 4 the Q3 results came out.Although total revenues showed moderate growth,recurring revenues showed a larger gain.Investors saw that adjusted EBITDA increased by almost 25%.And the CEO says that “as we enter the peak shipping season(Christmas),our team will be focused on continuing to meet our customers capacity requirements while delivering the best customer experience for this holiday season”.Q4 has traditionally been a good quarter for CJT.This blog believes that CJT stock price will have a good Christmas also.Look for CJT to be in the $108-$110 area by yearend.