WIth all of the penny stocks in the market to invest in, I’ve found one worth taking a closer look at for my subscribers right now.
We’re focusing on pink sheets penny stock Digital Caddies (CADY)…
Digital Caddies business model originally used a low-cost, easy-to-use and-implement GPS service for golf courses. That was in 2003…
CADY has since moved to a new business model that gives golf courses a tablet-based navigation and content platform that is wirelessly connected to the Internet and installed on golf carts.
With the Digital Caddies platform, The Players Network, course operators have the opportunity to increase revenue by promoting merchandise, food and beverage specials, or whatever they’d like through the system. For the golf course… right now the company is giving them away for free. That’s a great deal for the course…
And CADY’s business model is display advertising on this network during a golfer’s round to generate revenue. Pretty slick ad placement…
Think about it- golfers are one of the most sought-after demographics… male and female. Their participation in the sport proves they have some level of expendable income. Who better for companies to advertise to.
So, how has CADY done with this business model so far?
The company just posted financials showing gross profits fell from $413,000 in the October 2013 quarter, to a loss of $265,000 this past quarter (January 2014). Not only has total revenue fallen to less than 20% of the previous quarter, but the cost of this revenue has skyrocketed to more than triple the revenue itself!
So how’s the stock reacted?
It really hasn’t.
Over the past two years, the stock has remained relatively range-bound. Outside of the spike last summer, CADY has remained in the $0.14- $0.30 range.
And it may be some time before we see substantial revenue generated. While the storyline appears pretty solid, it will take some time and the implementation of quite a few GPS/tablet units.
Giving away tablets isn’t that cheap, and CADY, at last check, had just over $600,000 on hand to make things happen.
My biggest concern has less to do with the business model, which sounds like it has potential- but I’m keeping this stock off my buy list for now due to one simple fact:
Digital Caddies terminated their SEC registration in 2009- and has had late financial filings over the past 12 months.
One of the biggest factors I look for in an investment is some level of trust in financial reporting. I’m happy to invest in a company that’s losing money (at the time), but I can’t suggest my readers (or myself) buy a stock that’s not reporting to the SEC… nor filing timely reports.
If things change, I’d be happy to look at CADY as a potential investment… but until then I’m keeping it a penny stock to watch…
Keeping you one step ahead,