Friday, January 23, 2009

PhotoChannel in Forbes

Earlier this week, Forbes asked Stephen Roseman, the founder of hedge fund Thesis Capital, for his small cap picks ("Small Stocks Worth Buying"). One of the three stocks Roseman mentioned was PhotoChannel:

Finally, Roseman likes Photochannel Network (otcbb: PHCHF.OB[sic] - news - people ), a stock that investors might be wary of because its $45 million market cap suggests a lack of liquidity though its 54,000 average share volume suggests that there is a market in the stock.

"As the world is still migrating to digital photography, this is very much a growth business trading at a 'value' valuation," Roseman says. "They are benefiting from the recession-resistant nature of the industry (same-store sales were up 28% in the September quarter and 40% in the December quarter), and their gross margins are getting better as they do more volume--they have gone from 50% several quarters ago to over 70% in the December quarter. While they have an adequate balance sheet, they are growing their revenues and cash flow rapidly and have a bright future with strong technological tailwinds. There are only a few analyst estimates out there because the company isn't well-covered, but by my estimates, it's trading at a single-digit multiple, while growing in excess of 100% per year."

The image above comes from the Forbes article.

[Sic]Forbes includes the old, invalid symbol for PhotoChannel. The current, correct one is PNWIF.OB. Perhaps because Forbes didn't use the correct symbol, this article didn't come up under "Headlines" on Yahoo! Finance.


ravinsu said...

Nice find Dave. I hope Photochannel didn't pay these guys like they did for OTC journo :)

Photo could prove out to be a big winner long term ..if only they could keep a tab on their expenses.

ravinsu said...

Their key websites' traffic has also increased over the past few months.

PNI Media

DaveinHackensack said...

Thanks for the links, Ravinsu.

ndl11 said...

Careful in measuring website traffic month to month. Their traffic is seasonal and per the company basically follows the calendar starting with mid january being the slowest (after everybody is processing their holiday prints) ending in December

ravinsu said...

Good point ndl11, I am more interested in seeing that the Costco numbers have gone up since the slowdown during the website revamp.