Otelco: Undervalued with Great Upside Potential
A year ago I submitted my first contribution to Seeking Alpha. I covered a micro-cap company called Otelco. Their business model wasn't exciting, but the asymmetric opportunity was too great to pass up. I found the stock to be incredibly undervalued, a catalyst that could lead to quick and substantial gains, and very little downside risk.
Since that time, Otelco's share price has risen over 100%, and I don't believe the ride is over. The asymmetric upside potential of this small telecom company still exists--another 100% or so.
From the introduction (for complete citation and disclosure, see the original article):
Although its share price has increased by almost 100%, OTEL's valuation ratios remain near industry lows. Additionally, its management has increased discussion of strategic alternatives amidst a backdrop of frequent industry acquisitions. In other words, the company's stock still provides investors with a relatively safe "option" on its potential future acquisition.
First, let's explore the continued viability of OTEL stock as a sound investment relative to comparable companies. Then let's run through three likely scenarios for Otelco's (and its shareholders') future. Finally, we'll put numbers to those scenarios to establish realistic expectations.
Disclosure: I am/we are long OTEL.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
For additional disclosure information, please visit Spicer Capital's Disclosures.
Please Note: This article covers stocks trading with less than a $100 million market cap. Please be aware of the risks associated with these stocks.