Several readers are asking about this one today, so we’re republishing this article from February 2 below. The ad in question is mostly unchanged, mostly what they’ve done is update the numbers slightly (first they teased a $10 stock, then a $12 stock, then $10 again, now $12 again… it’s been a volatile six months)… but the company teased is still the same, and it’s up slightly from when Oxford Club first pitched it but they are now laying it on thicker with email versions of the ad saying “But if you had to look at just one stock today, it should be this one…” and “We’re guaranteeing you this stock will gain another $3 a share.”
They did report earnings that moved the stock a bit… their first quarter missed expectations and bumped the stock down, the second quarter beat expectations and moved the stock back up at the end of July, and since then it’s been tied to the general gyrations of the market (so it’s down a bit more, recently). Beyond that, you’re on your own — the following article from 2/2/15 has not been updated or revised.
This one caught the attention of several readers over the weekend, with lots of those 4,000% and 5,000% attention-getting numbers that make you dream of yachts and private planes… and, as luck would have it, one of our fantastic readers sent in a quick nicely-rounded look at it along with his solution, so I can share that with you in a moment, trying to make this speedy so we can get it out before we lose power as Winter Storm Linus blankets us with snow.
Heh heh. Sorry, that blanket pun is courtesy of Mrs. Gumshoe. We’re all stuck here together in a weather lockdown on Gumshoe Mountain and getting a little punchy. I’m guessing it it will be a while before the plows can even make it to our driveway… and presumably the plow drivers are all a little hung-over from celebrating the Super Bowl last night.
So what’s that ad? It’s from the Oxford Club in an ad for their basic membership and subscription to The Communique, and they’re talking up the crisis of “too much data” …
“The Only Solution to the Devastating $1.5 Trillion Wi-Fi Shortage Coming to the Internet
“Only one company owns a monopoly on this patented technology
“Research proves the demand for this market will soon surge 5,400%
“Here’s why I calculate this $10 stock will will see revenues rise 4,445% along with it.”
The “overwhelmed wireless networks” spiel has certainly been used before, to justify everything from the cell tower companies (AMT and the like) to Qualcomm (QCOM) to various technology stocks that claim an edge on speeding up the internet or the mobile networks, or the devices that connect to these networks. It seems very unlikely that there’s one solution, or that one standard developed by a little company will dominate the solution… but, well, hope springs eternal. S
Some more hype and clues if you’re playing along at home:
“… by 2020, research shows each person will own at minimum 50 Internet-connected gadgets… maybe even more!
“The GSM Association estimates connecting nearly 25 billion devices by 2020, while Cisco and Ericsson think we will hit 50 billion….
“The current wireless system can’t handle it all.
“And very soon, we’re going to run out of capacity.
“You may have experienced some of the early consequences already…
- Not being able to make a phone call when you’re at a sporting event or airport…
- Internet that comes to a grinding halt when you get more than two computers on one network…
- Interruptions and dropped signals when you are watching videos online…
- Picking up someone else’s radio in your car…
Or when, just for example, you’re chugging away at work on a snow day and the rest of the house us full of people watching Netflix streams on mobile devices.
So what’s the solution? Well, of course there we come to our “one small company” ….
“A humble company out of California has created – and perhaps more importantly, patented – a type of supersignal…
“It’s a next-level version of Wi-Fi we like to call ‘Hyper-Fi.’
“And what it does is quite remarkable…
“Think of it like the difference between a TV antenna and cable.
“With a TV antenna, there are all kinds of distortions. Signals get crossed. Energy outlets like microwaves warp the reception. Everything has to be perfect for it to work right.
“With cable, you get your own direct signal that ensures a constant, clear signal.
“Hyper-Fi works the same way. It uses a focused ‘dynamic’ beam to give users a powerful signal unlike anything offered in the current wireless world. It’s like having an ‘invisible wire’ going straight to your device.”
“As the lone holder of this patented technology, this company has more customers coming in than it can handle.”
So that sounds kinda exciting. How about a few more specific clues to get us to the name of the stock?
“… we calculate the wireless market is going to swell to $1.5 trillion by 2020.
“For the moment, Cisco gets the lion’s share of that figure.
“But it doesn’t have the patented Hyper-Fi technology this company owns.
“Consider… the company behind Hyper-Fi only went public in 2012. And it’s already nipping at Cisco’s heels….
“… this is a $900 million company… with about $330 million in revenue….
“In the most recent quarter, net income soared 151%. Gross margins are near 70%.
“And quarterly earnings growth is already up a mind-blowing 6,135% year over year.
“And yet the stock still trades for only $10 because it is just getting off the ground floor with this technology.”
Now, yes, the Thinkolator can get a solution to this one for you too — but an alert reader sent in his own summary of the stock over the weekend, and I checked and he’s right about the stock, so I’ll let him sum it up for you since I haven’t researched the company yet… this following in italics comes from a reader, Tom, who’s been with us since the very beginning of Stock Gumshoe (that was way back in 2007, if you’re curious):
IT APPEARS this is Ruckus Wireless, Inc.(RKUS), which meets the criteria IPO 2012, (near) $10/sh., market cap $891M ~ $900M. The company is a carrier-class Wi-Fi access provider, as seen Yahoo! http://finance.yahoo.com/q/pr?s=RKUS+Profile
Caught my curiosity, so did some digging and thought I’d pass it along. Couldn’t match up the astounding earnings growth referenced, though growth appears solidly above value having a very low PEG, with 2014 earnings average estimate of $0.44 (which provides for a PE of 24) and 2015 of $0.60 (December), giving it a growth rate of 36 (0.6/0.44-1)*100, or valuation 50% below growth. So in 1 year will it be 50% higher, or ~$15/sh.?
Zacks gives it a 2 “buy”.
GuruFocus does not seem to support the Yahoo data, suggesting to me a lower value.
If RKUS is in a range, it is currently at the bottom of it and so would be worth looking for a buy entry. Looking back more than a year, RKUS tends to move up 2 to 3 weeks prior to earnings, then pull back. It has already moved up the last 2 weeks. The earnings are due out in 2 more, on 2/10/15.
Back to Travis now — Tom’s right about it being Ruckus that’s touted by the Oxford Club folks… it is posting those numbers, it is a fairly young company, it trades for about 25X current-year earnings and analysts think it’ll grow earnings at 15-20% in the future… and it has beaten earnings estimates handily for four quarters in a row but still has a pretty moribund share price, so I have no idea what will happen when they report earnings a week from tomorrow.
And back to September now — the stock hasn’t beaten estimates four quarters in a row anymore — the last three quarters have included one beat and two “in line,” the stock is still at about 25% 2015 earnings and about 20% 2016 earnings estimates, analyst expectations are for a dip in sales and earnings this year followed by a resurgence of growth next year. I’ve left the original comments appended to this updated article, so you can see what your fellow readers have been thinking about Ruckus and its prospects.
For disclosure’s sale, I now personally own some long-dated call options on RKUS — I won’t sell them within a week of the republished date of this teaser solution.