Widepoint – Quick Overview Od The Long Thesis

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Widepoint – Quick Overview Od The Long Thesis
AnandKZ / Pixabay

I bought shares of Widepoint BeActivist Thu, 03/30/2017 – 19:31

A month ago, I bought shares of Widepoint (Amex: WYY) for roughly 70¢/share. The stock currently trades at 58¢ after going beyond 80¢ last fall. Yeap, it’s a significant drop but since I had bought a bunch at 39¢ last fall, I’m still doing ok. The reason that I’m bringing this company to you today is that Widepoint will be presenting their earnings this week on March 30th and I feel that the stock should react positively to the news.

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(I have to say that what’s in this email represents my opinion only and it’s purely for your information. Also, always seek advice from registered investment advisors before investing and read this important disclaimer.)

In short, Widepoint is a 300 employees, $70-$80M sales, McLean VA based company that mainly serves governments and commercial businesses. They manage telecom costs and ID (security) management for their customers’ mobile devices.

What I like (here’s a short presentation):

  • Very good sales growth of roughly 15% CAGR
  • Strong balance sheet, liabilities are two times lesser assets ($51M) and they sit on $8M cash reserve
  • Strong enduring competitive moat with multi years government contracts (Dod and DHS have opened doors for HHS, DOJ, DOI, VA and Others)
  • Opportunity: US Coast Guard Estimated over 30000 Smartphones and expect $10M+ of Profitable Revenues in 2017
  • Sole Authorized Provider of ECA certificate (ECA PIV-I Private Label) for DoD and GSA

However, they are not cash flow positive yet but, last year, the management team committed to fix the EBITDA issue (which they did improve and are still improving) and are on their way to fix the cash flow problem.

Just a reminder that this stock a tiny traded (very illiquid) and it is a sub dollar “penny stock” type. Because of that, approach it carefully because it doesn’t take much for the stock price to bounce around for no particular bad or good reasons. So, “don’t bet the farm on it”; In my case, I used limit orders as always and I didn’t invest my whole portfolio on it. only a fraction. Still, the fundamentals are pretty good and my opinion is that this company won’t go bankrupt anytime soon

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