New Mid-Year Stock Pick
Quadlogic Control Corp (QDLC)
From S.A. Advisory
Quadlogic Control Corp (QDLC) is the only automatic meter reading (AMR) provider in the US that develops, manufactures & sells digital electric interval, “smart” meter & metering systems. Recently QDLC has begun reporting (visit www.quadlogic.com/investor-relations/ for all current income/balance sheet statements).
The company has been awarded two very attractive royalty agreements during fiscal 17 and fiscal 18 (ending February). Due to these contractual agreements, we anticipate earnings for last year results to be released soon. We estimate earnings of around $0.12/sh and $0.30 for the current year.
Management has change their tune and now plan on filing consistently on a quarterly basis. This is happening because 1) profits are going to increase dramatically; and 2) a group of investors has filed a proxy in order to create a new and independent board of directors that either want to sell the company or become more transparent, due to the depressed share price. Based upon the current share price of $0.70 & earnings est. of $0.12 for last year and this year’s estimate, of $0.30, the PE is 5.8X and 2.3X, respectively. (11.3 mil shares outstanding).
The proxy fight is extremely bullish for shareholders, in our opinion. The company is currently bidding on a series of huge contracts in Mexico for fiscal 2019.
We believe that situation has the potential to advance dramatically during the next 12 months. We have a $2.50 target—a huge potential based upon the current depressed share price and fundamental variables.
Finally, the proxy statement released to current shareholders is rattling the nerves of the current management team and board of directors. Changes are in the wind and risk tolerant investors should consider this opportunity.
We are extremely bullish towards QDLC and have placed a strong buy recommendation for short- and long-term capital gains.
William Velmer, S.A. Advisory, www.saadvisory.com, 949-922-9986, June 25, 2017
WSBI Editor’s Note: While Mr. Velmer’s picks are speculative in nature, he holds a very compelling track record. His January 2016 Top Pick—Hemacare (HEMA)—was recommended at $0.44, and is now trading at $2.65. He continues to rate the stock a strong buy, and by year end, anticipates a share price of $5.00.