My Favorite Way to Spend a Dollar

Though I tend to avoid "penny stocks" (and, generally speaking, I'd advise others to do the same), there's one company with a lowly share price that is better than its label.

The Soyo Group (Soyo.ob) is a tiny electronics company with a bright future.

Soyo.ob Chart: Finance.Yahoo.com

Soyo makes lots of different types of consumer electronics. They began making high-performance motherboards and other specialized parts for computers, and have since branched out into other products. Currently, they make products like bluetooth headsets, USB flash drives, and other devices that they can sell cheaply and competitively.

However, their current cash cow is LCDs. They began producing LCD monitors for computers, and sales took off - during a particular week in August (and, I'm sure it represents a broader trend), Soyo's 24-inch LCD was the bestseller throughout the country, beating Samsung, LG, HP, and others. (Soyo had 50% market share; the press release can be read here.)

They now sell a wide range of monitors at multiple big-box retailers, including OfficeMax, OfficeDepot, and Fry's, along with multiple other retailers. They also sell products via the internet, including Overstock.com. Here is a Soyo monitor at Overstock; check out the great reviews.

The most recent and potentially lucrative development is a partnership with Honeywell to produce large LCD TVs under the Honeywell brand name. This should help Soyo continue to grow sales; attractively-priced TVs and monitors will now be available under a name consumers know and trust, not some mysterious discount brand. They are debuting some Honeywell monitors in early 2008, followed by larger TV's throughout the year.

The LCD market is certainly competitive. However, Soyo's products have been reviewed very well, and as Americans are watching their pocketbooks as the country is becoming economically challenged, they might be more eager to pass on a Sony TV or a LG monitor if a cheaper alternative is available.

Soyo is also growing at a feverish pace. Net revenues increased by 124%, to $24,202,395 in the three months ended June 30, 2007, compared to $10,787,515 in 2006. They reported earnings per share of $.05/share during the three months that ended September 30th. Their earnings during this holiday quarter should be excellent, too. So far this year, they've earned $.06/share, which gives them an 18 trailing P/E. That's already very reasonable for a company with such growth; but if Soyo can earn another nickel in the fourth quarter, or project a dime for next year, the shares will undoubtedly look extremely undervalued.

Soyo is not some pink-sheets scam corporation (at least to my knowledge). The stock is volatile, and volume is low; so beware of manipulation. I have my own money at risk on Soyo, because I believe that it is a legitimate company that's quickly growing. Since it is trading at only $1.12/share (and has a $50 million market cap), there is tremendous potential for growth in such a tiny company. But, the dangers of investing in a company like Soyo are much higher than with a larger, more established company; as always, do not invest money that you cannot lose. However, as long as Soyo's books aren't cooked and they continue to grow their brand as they have thus far, I believe Soyo could be a ten-bagger over the next few years. Who knows - maybe in a decade, a Soyo might be as commonplace as a Sony.






(Full disclosure: Author is long Soyo.ob . Additional note: Trading in over-the-counter securities is very risky. My advice is not meant to be traded on, and I am not a registered investment adviser. Always do your own research, and you are solely responsible for any investment decisions.)

Syntax Brillian Corp (BRLC) Individual Stock Analysis/Commentary

Syntax Brillian Corp (BRLC)

As a consumer, you have probably never heard of Syntax Brillian before, and have no idea what they do. However, there's a good chance you have probably seen their products, and you might even own one yourself; they make LCD High-Definition televisions, under the brand name Olevia. Olevia is a discount brand; a fully-priced Olevia high-def TV may be 30% cheaper than a Sony that's on sale.


A major reason why I'm looking at the stock is because people seem to like the TVs: here is example from cnet.com. Cnet only gives the TV a 6, but 33 reviews contradict (some directly calling out!) Cnet's rating; the average user review is an 8.3, or "Excellent." I'm not going to try to sell you a TV, so I won't provide any more examples directly. Other sites I looked at had reviews of 7s or 8s out of 10, or 4 stars out of 5. It seems to be a good product at an excellent price.

One last example of how great of a deal the TV's are: here is a page from circuit city's website, featuring LCD TV's in the medium-size range. Notice that Olevia are the cheapest, followed by another discount brand (Vizio), and then the major manufacturers are hundreds of dollars more.

So how is that going to help BRLC increase in price? Here's my train of thought:

• Short Term:
• Retailers have been doing pretty well this summer, even during the "credit crunch" and worries about a recession. TV's should mirror that trend.
• It's baseball playoff time, and the start of football season, which is a major time of HDTV purchases.
• If consumers are becoming tight on money, what kind of TV are they going to buy? The well-reviewed, discount brand that's two-thirds of the price of the competition.
• Long Term:
• They have recently swung to profitability, and their forecasts are for a continued increase in revenue and profits. The TVs are appearing at more retailers across the country; the brand has plenty of room to grow.
• The fundamentals, based on current estimates, are solid: it's forward PE is only 8, based on today's pricing and estimates. For a high-growth company, that is ridiculously low. As long as BRLC doesn't guide lower, shares should have plenty of room to grow.
• I think that many Americans will be replacing the last generation of picture-tube TVs with the new LCD or Plasma TVs over the next 10 years. BRLC's position as a discount manufacturer is excellent to capitalize on that potential trend.

Here are revenue estimates: keep in mind these could change at any time, but assuming these figures are correct, they are very promising:

Revenue Est	Current Qtr Jun-07	Next Qtr Sep-07	Current Year Jun-07	Next Year Jun-08
Avg. Estimate	198.11M	256.58M	690.47M	1.27B
No. of Analysts	5	5	5	5
Low Estimate	195.00M	228.64M	687.36M	1.12B
High Estimate	207.72M	270.70M	700.08M	1.54B
Year Ago Sales	59.81M	87.02M	192.99M	690.47M
Sales Growth (year/est)	231.3%	194.9%	257.8%	84.5%

BRLC is set to report earnings tomorrow, September 11th, after the bell. The earnings, and future guidance, will dictate much of the company's future. I honestly would not suggest getting into the company tomorrow, before the earnings come out, because that's a very risky play that could lose a significant portion of the investment. However, after the numbers and future projections come out, the picture will be clearer on whether BRLC is still the great long-term deal it appears to be today.

Plus, a very high percentage of shares are currently shorted, so if earnings are positive and the stock price goes up, a short squeeze could easily propel the price even higher. But like I said, don't enter a long position at this point; wait until earnings are released. Even if you miss some positive movement, the buying opportunity will not be lost.




I have been long on BRLC for a few days now, in anticipation of earnings, simply because the risk versus reward is worth it for me. Remember, anything written on this blog is for entertainment purposes only, and in no way is financial advice that you should act upon.