Wednesday, November 9, 2011

DITC Telecommunications Penny Stock

DITC is a penny stock within the Telecommunications sector. When considering what penny stocks to include within this sector I recommended considering DITC. The stock is attractively priced, offers high quality products and would see over 100% returns if it returned to its 52 week high.


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Ditech Networks Inc (DITC)
Recent price: $0.91
52 week range: $0.85 - 1.99
Market cap: 24.18M
Company Website:  http://www.ditechnetworks.com/investors/overview.html

Overview:
DITC designs, produces and distributes telecommunication products to voice networks. Have you ever had a conversation with a telemarketer or political campaigner where there was an echo, background noise or distortion? They would be potential customers for this penny stock as they offer products that increase call clarity, reduce echo and background noises.

They also have technology that turns voice to text for sending text messages, posting on social media or anything else you could think of. Recently Cincinnati Bell added this service to its voice mail which will enable users to receive a text message on their phone with the voice mail. This would be a great feature to have if you are in a meeting and can't listen to your message you could quietly read it.

Current valuation:
This penny stock's current P/S is 1.3 vs. its five year average of 1.9 which is 31.58% less than its average over time. The penny stock is also near its 52 week low. These two factors lead me to believe it is currently under valued and can be bought at a discount.

Concerns:
 This penny stock had strong revenue in 2007 but has struggled since, no doubt due to the economic downturn. I am anticipating some recovery in the stock price as the economy strengthens. DITC has had negative earnings for most of the years in this graph as well.

Target Price: $1.37
Return: 50.55%
My target price incorporates the five year average of the P/S ratio as well as if it were to trade in between the 52 week range. I take a 50% weight of each price and came up with $1.37.

Consider visiting the company's website for more research material; annual reports are a great place to start




DITC is include in Pennystock-blogs portfolio here


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2 comments:

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