InvestMacro

Source: Chris Thompson  (8/24/23)

In Q2/23 the company began to realize synergies from its recent acquisition, which boosted revenue and cash flow, noted an eResearch report.

Data Communications Management Corp.’s (DCM:TSX; DCMDF:OTCQX) Q2/23 financial results were notable for a 75% year-over-year (YOY) increase in revenue, attributed to its acquisition of Moore Canada Corp. (MCC), reported Chris Thompson, eResearch’s director of equity research, in an August 17 update note.

“The combined businesses achieved growth through expanded revenue with existing clients, successful acquisition of new clients, and ongoing efforts to mitigate the impact of raw material cost increases by passing them on to the customers,” Thompson wrote.

Attractive 114% Return

The Canadian marketing and business communication solutions provider offers investors a significant potential return of 114%, noted Thompson. It is trading now at about CA$3.22 per share, whereas eResearch’s target price on it is CA$6.90 per share.

Data Communications Management is a Buy.

Growth Record Maintained

Thompson reviewed Data Communications Management’s financial results from Q2/23, the company’s seventh consecutive quarter of year-over-year growth.

Revenue was a beat, coming in CA$119 million (CA$119M) versus eResearch’s CA$113.2M forecast. Also, Q2/23 revenue was 74.7% higher than Q2/22’s of CA$68.1M.

“Data Communications Management reported that it believes it can still achieve its targeted organic annual revenue growth rate of 5%,” wrote Thompson.

Gross profit in Q2/23 was CA$32M, up 56.7% YOY. Gross margin in Q2/23, however, was 26.9%, down 3.1% YOY but consistent with eResearch’s 27% estimate.

The tech solutions firm aims to achieve gross margins of greater than 30% in the upcoming quarters. Following the closing of the MCC acquisition in late April, Data Communications Management began initiatives to reach this target through synergies and greater efficiencies in organization, operations, procurement, and revenue, Thompson noted.

Adjusted EBITDA in Q2/23 was CA$13.8M, up 45.8% YOY from CA$9.5M and partly due to the MCC acquisition.

As far as costs, Q2/23 sales, general and administrative expenses were CA$23M, up from CA$18.8M in Q1/23 and up from CA$13.8M in Q2/22. Data Communications Management aims to achieve savings from synergies in the CA$25−30M range over the next 18−24 months and has already realized CA$4.2M in this regard.

Overall, for Q2/23, Data Communications Management reported a CA$2.9M net loss, whereas last year, at this time, it had achieved a net profit of CA$3.8M. Similarly, Q2/23 earnings per share was (CA$0.06) compared to a CA$0.09 gain in Q2/22.

Review of Balance Sheet

In May of Q2/23, the company generated CA$26.1M of gross proceeds from a private placement of common shares offering, reported Thompson.

The following month, it yielded CA$24.1M of gross proceeds from the sale and leaseback of its warehouse in Oshawa, Ontario.

At Q2/23’s end, Data Communications Management had CA$21M in cash and CA$112.7M in debt after having paid it down by CA$60.4M.

Important Disclosures:

1. Data Communications Management Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Disclosures for eResearch, Data Communications Management Corp., August 17, 2023

eResearch Intellectual Property: No representations, express or implied, are made by eResearch as to the accuracy, completeness, or correctness of the comments made in this report. This report is not an offer to sell or a solicitation to buy any security of the Company. Neither eResearch nor any person employed by eResearch accepts any liability whatsoever for any direct or indirect loss resulting from any use of this report or the information it contains. This report may not be reproduced, distributed, or published without the express permission of eResearch.

ANALYST ACCREDITATION eResearch Analyst on this Report: Chris Thompson CFA, MBA, P.Eng. Analyst Affirmation: I, Chris Thompson, hereby state that, at the time of issuance of this research report, I do not own common shares, share options, or share warrants of DATA Communications Management Corp. (TSX: DCM).

eRESEARCH DISCLOSURE STATEMENT eResearch is engaged solely in the provision of equity research to the investment community. eResearch provides published research and analysis to its Subscribers on its website (www.eresearch.com), and to the general investing public through its extensive electronic distribution network and newswire agencies. eResearch makes all reasonable efforts to distribute research material simultaneously to all of its Subscribers. eResearch does not manage money or trade with the general public, provides full disclosure of all fee arrangements, and adheres to the strict application of its Best Practices Guidelines. eResearch accepts fees from the companies it researches (the “Covered Companies”) and from financial institutions or other third parties. The purpose of this policy is to defray the cost of researching small and medium-capitalization stocks which otherwise receive little or no research coverage. DATA Communications Management Corp. paid eResearch a fee to have it conduct research and publish reports on the Company for one year.

To ensure complete independence and editorial control over its research, eResearch follows certain business practices and compliance procedures. For instance, fees from Covered Companies are due and payable before the research starts. Management of the Covered Companies is sent copies, in draft form without a Recommendation or a Target Price, of the Initiating Report and the Update Report before publication to ensure our facts are correct, that we have not misrepresented anything, and have not included any non-public, confidential information. At no time is management entitled to comment on issues of judgment, including Analyst opinions, viewpoints, or recommendations. All research reports must be approved, before publication, by eResearch’s Director of Research, who is a Chartered Financial Analyst (CFA). All Analysts are required to sign a contract with eResearch before engagement and agree to adhere at all times to the CFA Institute Code of Ethics and Standards of Professional Conduct. eResearch Analysts are compensated on a per-report, per-company basis and not based on his/her recommendations. Analysts are not allowed to accept any fees or other considerations from the companies they cover for eResearch. Officers, analysts, and directors of eResearch are allowed to trade in shares, warrants, convertible securities, or options of any of the Covered Companies only under strict, specified conditions, which restrict trading 30 days before and after a Research Report is published.

Source: Streetwise Reports  (8/24/23)

VSBLTY Groupe Technologies Corp. is a major player in the growing “Store as a Medium” advertising market. However, its latest deployment in Mexico showcases how the company’s core tech is equally applicable for top-tier intelligent zero-contact access control.

The definitive agreement is expected to be finalized over the next 30 days. 

In light of this news, CEO and Co-founder Jay Hutton said, “This acquisition is synergistic with VSBLTY’s vision of the retail advertising segment . . . Shelf Nine’s integration with our computer vision analytics technology is a win-win for both companies. Operating as a wholly owned subsidiary of VSBLTY, Shelf Nine and VSBLTY have the opportunity to further leverage each company’s core competencies and further penetrate the retail media market, estimated to be worth US$160 billion by 2027. In addition to both companies benefiting from recurring SaaS fees, they also generate added revenue from content development and media sales”

VSBLTY  is generally known for the variety of smart applications it offers to drive brand engagement and put marketing insights in motion.

At its core, the company, which is headquartered in Philadelphia, is engaged in Proactive Digital Display, which transforms retail and public spaces as well as place-based media networks using software-as-a-service (SaaS)-based audience measurement and machine learning.

This work allows retailers and brand builders to identify customer habits and even individual customers, thereby providing uniquely tailored multimedia experiences from end-to-end along the buying journey in brick-and-mortar locations with greater fidelity than one would experience online.

By utilizing facial recognition, age, and gender, VSBLTY’s proprietary technology can effectively enhance retail brand engagement and measurement through customized ads on in-store digital displays at the point of purchase in real-time. This technology has proven to increase brand sales by over 25%.

VSBLTY’s main products include DataCaptor, VisionCaptor, VSBLTY Vector and VSBLTY Metrics. DataCaptor leverages camera and sensor technology through AI tools, enabling real-time analytics and anonymous audience data. VisionCaptor Content Management System provides a variety of capabilities for bringing proximity-aware, interactive brand messaging to life on any digital screen.

These two key technologies are deployed together to create custom brand experiences for users who follow them throughout connected retail experiences.

However, fewer people are aware of VSBLTY Vector, the company’s security-focused software, which provides facial recognition and weapon detection.

The Catalyst: Access Control Rollout for Major Mexican Customer

On April 8, VSBLTY announced that a major Mexican customer had successfully deployed the firm’s VSBLTY Vector solution across a network of 40 CCTV cameras to automate access control at the customer’s two-story headquarters facility, replacing security cards and allowing the free flow of employees while rapidly detecting and alerting security forces of any unauthorized or potentially bad actors.

According to Insider Intlegence’s Retail Media Ad Spending Forecast H1 2023, “We expect advertisers to pour more than US$45 billion into retail media ad spending in 2023.” The report projects that spending to expand to some US$ 106 billion by 2027.

As the announcement explains, “Previously, traditional access control systems have been key cards, key fobs, or digital passwords, but each has its own security limitations.”

“Employees now enter their workplace without physical checkpoints while CCTV cameras and AI-backed software verify their status. If the system identifies an unauthorized person, building security is notified immediately.”

“To ensure a safe workplace, this program provides a continuous search for unknown persons based upon an enrollment database of employees and other authorized personnel. Each day, approved visitors to the building are automatically logged and entered into the firm’s system.”

“The software is also not only capable of identifying a stranger (whose image is not in the records) attempting to enter an authorized area but can identify a terminated or previously problematic employee whose image is in the system. This advanced program can also offer additional security, including weapons detection and suspicious behavior to trigger alerts.”

As for other catalysts, Hutton told Streetwise there are a couple of catalysts to look out for next quarter.

1. VSBLTY will be entering into a new market as an extension of the current relationship with ABInBev.
2. There is traction in Saudi with VSBLTY’s joint venture in the region to launch the first large-scale retail media network.
3. VSBLTY will continue tractions with partners in religious institutions and schools with the VSBLTY security AI solutions.

Why This Sector? Expanding the Value of AI

Using AI to recognize, quantify, and collate unknown users, such as the random collection of shoppers who visit a brick-and-mortar retailer in a given day, is already a valuable market segment.

According to Insider Intlegence’s Retail Media Ad Spending Forecast H1 2023, “We expect advertisers to pour more than US$45 billion into retail media ad spending in 2023.” The report projects that spending will expand to some US$ 106 billion by 2027.

With automated advertising solutions designed to target specific demographics in active retail spaces, VSBLTY is positioning itself to capture a significant share of that rapidly expanding market. However, by repurposing its core AI tech for security work, it is also gaining access to a huge secondary market no other retail advertising networks are addressing.

According to a report from Future Market Insights, “The global building access control security market is expected to secure a market value worth US$ 11.89 billion in 2023. During the forecast period from 2023 to 2033, the market is likely to display a CAGR of 14% while garnering a value worth US$ 44.2 billion. The increasing demand for smart buildings and infrastructure will be driving the demand for the building access control security market in the future.”

The report goes on to specify that zero-touch access control solutions, such as those offered by VSBLTY, are in particular demand in a post-pandemic market. By deploying its core technology across these disparate fields, VSBLTY has positioned itself to grow in a multi-faceted manner as these markets for novel AI technology mature.

Why This Company? Multiple Markets for AI Automation

As the company is situated at this valuable intersection between retail advertising and access control, it’s easy enough to market as making customers’ existing video cameras “smarter” by providing real-time monitoring and alerting. This ability to install using legacy technology is a powerful selling point for clients who have existing and expensive relationships with traditional security hardware vendors.

“Employees forgetting passwords, losing keycards and fobs can be both an administrative nightmare and a financial burden for corporations,” explains VSBLTY Co-founder & CEO Jay Hutton. “This deployment of our AI-based Vector product for access control and building security alleviates many issues inherent in traditional access control systems.”

“We anticipate the success of our advanced security system in Mexico will lead to many other installations worldwide,” he concludes.

Why Now? ‘Almost Unlimited Upside’

On August 1, Technical Analyst Clive Maund published a detailed analysis of VSBLTY quite optimistically titled “This Tech Co. Has Almost Unlimited Upside.”

In it, he explained that “Whilst it is generally unwise to go against the prevailing trend when it is still in force, there are exceptions when the volume pattern strongly indicates that reversal is imminent, which is the case with VSBLTY, and the case for buying Visibility is stronger still because the price of the stock is so close to zero that there is almost no downside — as with an option you can only lose your stake, whereas the upside is relatively unlimited.”

On August 1, Technical Analyst Clive Maund published a detailed analysis of VSBLTY quite optimistically titled “This Tech Co. Has Almost Unlimited Upside.”

“On the 26-month chart, we can see the horrendous bear market in Visibility that has taken it from a peak at almost CA$2.00 in November 2021 to bottom at a miserly 5 cents a couple of weeks ago.

The reason that we are interested in it here, apart from the fact that it can’t drop much more because it is almost worthless, is the appearance of persistent strong upside volume last month and especially this month that has driven the Accumulation line steeply higher,” Maund explained.

“This is viewed as evidence of determined Accumulation by a person or persons or an entity who consider(s) the company to be grossly undervalued here and might be the prelude to a takeover.”

“VSBLTY is obviously a speculative play here that is only suited to more experienced investors and traders who understand the risk inherent in this setup. Could the flurry of buying interest last month and this be simply a ‘flash in the pan’ that leads to nothing and the downtrend continue? Well, it could, but that is considered unlikely.”

“Instead, we recognize that you could lose your stake buying here if it continues even lower and maybe the company goes bust, but at the same time, if it does recover, you could make many times your investment, and since the technicals indicate that the chance of this happening is better than 50:50 it is considered to be a worthwhile calculated risk.”

Ownership and Share Structure

According to Reuters, 3.21% of VSBLTY’s stock is held by management and insiders. Director Thomas Hayes has 1.10%, with 3.67 million shares. Co-founder, CEO, President, and Founder Jay Hutton has 0.52%, with 1.74 million, and CTO Gary Gibson has 0.40%, with 1.34 million.

3.30% is with strategic investor Actus Interactive Holdings Inc., with 10.97 million shares.

0.25% is with institutional investors. Palos Management Inc. is the largest institutional shareholder at 0.21%, with 0.70 million shares.

The rest is with retail investors.

As of June 28, 2022, VSBLTY had a market cap of CA$82 million, with 209,753,999 basic shares outstanding, 47,256,115 warrants, and 14,440,834 options, for a fully diluted base of 271,450,948.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of VSBLTY Groupe Technologies Corp.
2. Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

“In 1987 and 2000, the month of August presented a great chance to sell stocks”

By Elliott Wave International

Many investors know that some time periods of the year tend to be more bullish for stocks, like the holiday season. Other times tend to be more bearish, like September and October.

However, seasonal tendencies are just that and don’t mean the stock market will follow the expected script every year.

That said, an investor doesn’t want to dismiss seasonal tendencies, especially when technical factors, such as Elliott wave analysis, align with those tendencies.

Presently, we are entering a seasonally bearish time period, especially when you consider milestone years. Here’s a quote from our Aug. 14 U.S. Short Term Update, a thrice weekly Elliott Wave International publication which offers near-term analysis of key U.S. financial markets:

In 1987 and 2000, the month of August presented a great chance to sell stocks. In 1929, the final high came just a few days into the next month, on September 3. At the 2007 stock market peak, several stock indexes topped a few weeks before August, in mid-July, such as the Dow Jones Composite, the Value Line Composite and the small-cap sector.

Looping back to the statement that one should combine one’s knowledge of seasonal tendencies with Elliott wave analysis, let’s pick out one of those milestone years — 2000 — and see what the Elliott wave pattern for the Dow Industrials looked like at the start of September in that year.

This chart and commentary are from the September 2000 issue of the Elliott Wave Financial Forecast, which published July 28, 2000 (The Elliott Wave Financial Forecast provides big-picture analysis and forecasts for major U.S. financial markets):

Our confidence in the short-term picture is very high, which indicates a down September-October for the blue-chip averages.

The Dow rallied less than 1% into the middle of the next week, then plunged 15% into mid-October.]

Of course, not every milestone stock market year is an exact replica of the previous one.

But, as implied, it’s important to keep an eye on the stock market’s Elliott wave pattern in conjunction with any other indicator.

Frost & Prechter’s book, Elliott Wave Principle: Key to Market Behavior, discusses the value of the Elliott wave model:

The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable.

You can have free access to the online version of Elliott Wave Principle: Key to Market Behavior by becoming a member of Club EWI, the world’s largest Elliott wave educational community. Club EWI is free to join and allows you complimentary access to a wealth of Elliott wave resources on investing and trading.

Just follow this link to get started: Elliott Wave Principle: Key to Market Behavior – get free and unlimited access..

This article was syndicated by Elliott Wave International and was originally published under the headline Stocks: Keep This in Mind About Seasonal Tendencies. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.