RE: RE: Loyalty Industry Excellent commentary. Thank-you.
Both companies have potential in their respective industry categories. Advantex with their 3rd affinity partner, namely Cdn Tire, is moving forward. Latest 6 month EBITDA was nearly $2 million and a net profit of 508,000. They also have 1,050 participating merchants, up from the approx. 750 they had in 2010.
Both Advantex and Futura trade at about 2 cents. ADX has 97 million outstanding shares vs 187 million for Futura. There is more price sensitivity for ADX. But FUT has a larger market cap at the moment.
Looking at the charts, I was amazed at the high correlation between the two. The CNSX listing for ADX would therefore be a non-factor. Both Futura and Advantex are flying under the radar, but both are still being noticed. FUT peaked at 6.5 cents while ADX reached 8.5 cents in 2011. Both on good volumes. So there is investor interest in both.
In March 2010 both ADX and FUT had a run up, the a drop until the start of 2011 when both went up together. Around mid 2011 both had a more muted run up, but still showed some degree of correlation.
The low volumes being traded for both companies in recent months may seem like there's a lack of interest. But I don't think so. The weekly OBV indicators for both are strong (preference is for FUT however), because in addition, FUT has a stronger A/D (Advance/Decline) indicator. I would like to see both indicators complement one another, as they both measure stock accumulation. The only difference is that they use different calculations.
FUT has potential with its US expansion plan. Looking at a potential 60,000+ merchants and if even 25% sign up it's still huge. But it has to deal with its debt and financing issues to make it all happen.
The idea with the loyalty industry was that investors favour a particular industry and invest accordingly. For example, when the mining industry is hot so are most mining stocks. The big companies and the juniors all share in the upbeat market. This is also when financing comes easier and at higher stock prices.
The same goes for the loyalty industry. AIM (Aeroplan) and PTS (Points International) are moving up. They are profitable and well established. But the theme in my posts was that it will bring the smaller players up also. As an investor, I look at which industry is the leader (using relative strength RS comparisons) and then pick the best stock(s) within that category.
Both FUT and ADX have their strengths and like mentioned by TSXmarketwatch, are the two companies which should be compared to one another. Choice is made based on multiple factors. I use charts/indicators to supplement what the company is doing. Others may use fundamental analysis, ie: profit growth and market cap/sales ratios.
I agree that stock prices of FUT and ADX will not match Aeroplan nor of that US company trading at $120. But there will be opportunity to realize profitable stock trades in the near future. 2 cents for both, will be a thing of the past. If 2 cents or lower is the true price and here to stay, then I would have long expected to see much heavier sell volumes over the past 8 months. Sort of a flame-out. But this has not happened.