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200% gains on 61 cent Sprylogics (V.SPY) but...

Danny Deadlock Danny Deadlock, TickerTrax
2 Comments| March 13, 2015

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As resource stocks on the TSX, TSXV and CSE continue to struggle (going on four years now), investors are recognizing that significant opportunities exist in the tech and biotech/healthcare space.

For decades, microcap and penny stocks in Canada have been dominated by junior resource exploration. But as the hope of a sector recovery has diminished even further, more and more investors and speculators are looking elsewhere - and for 2015 that has so far entailed tech and biotech/healthcare stocks where sizeable gains are being produced.

For Ticker Trax subscribers, one of the first companies we looked at heading into Q4/14 was Sprylogics (SPY.V 61 cents) at 19 cents. The focus was the mobile advertising space and the attractive valuation and share structure of SPY.

That decision has produced 200% gains in six months and 80% gains from my last update to the group on February 17th.

It is because Sprylogics is trading near the top of their chart that I am reluctant to feature the company to free weekend readers. But in light of that concern, this is still a company worth monitoring for potential pullbacks - whether that happens or not I really don't know. The broader market has been selling off this week and while SPY has gone up, it may hit a wall short term if the selling in blue chips accelerates next week.

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My continued interest in SPY is because of the sector strength and the introduction of a new Smartphone APP that targets the large and lucrative "Fantasy Sports" market. Their core business of mobile advertising is doing well but this new APP may help build the more speculative (high growth) side of the micro cap valuation.

The company just closed a $3.2 million financing with a large portion of it going to American investors - who I believe have been strong buyers in the open market recently.

The last report I sent paid Ticker Trax subscribers (below) will help with due diligence and you will want to visit their website for the most recent news.

If you find you have an interest in the company, keep an eye on the share price to see what evolves over the next week or two as the broader market tries to find stability.

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Ticker Trax Update for Paid Subscribers February 17th

Sprylogics International Corp. (TSX: V.SPY, Stock Forum) ( 34 cents)
www.sprylogics.com/

> Mobile device advertising with a strong & valuable patent portfolio
> Fantasy Sports App (new)
> Current market cap: $11.5 million (Peer stocks doing exceptionally well)

Back in September I introduced SPY at 19 cents. My next update on the company was November 10th at 61 cents when the stock was up 220%. At the time I said we would follow them into 2015 so now is a good time for an update as they have just raised $1.8 million. For new investors, this should be a good time to take a look.

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Two similar stocks have been doing VERY well lately and it makes me think there is substantial value buried in Sprylogics.

1) Snipp Interactive Inc. (TSX: V.SPN, Stock Forum) (92 cents) – Snipp is up 200% since October and even with 92 million shares outstanding and an $85 million market cap, it is trading at the top of its chart. They just raised $12 million at 55 cents so it’s evident the Canadian brokerages are still able to float tech related financings. Financials to the end of September showed them with only $1.5 Million in net assets (mostly cash and receivables). Revenue in that quarter was only $800k with a small loss. Surprisingly weak financials given the high market cap and ability to raise $12 million – expectation for growth is obviously very high.

Snipp’s core business is mobile advertising for smart phones and tablets

2) TheScore Inc. (TSX: V.SCR, Stock Forum) (69 cents) – this company has a huge amount of stock outstanding at 255 million shares and just raised $23 million at the top of their chart (SCR is up 100% since October). They currently boast a market cap near $180 million. The end of November they had $33 million in net assets with about $19 million in net cash and receivables. Revenue in the quarter was $3 million with a net loss of about $2 million. With such a large market cap, investors must have very high expectations for the company. That or its grossly over-priced! Either way SCR has been trading big volumes on the TSXV.

SCR’s core business is eSports and driving the interest lately is their entry into the video gaming / fantasy sports market through the acquisition of Swoopt (a fantasy sports app).

Sprylogics has an attractive share structure with only 34 million shares outstanding (after the recent financing) - unlike the two companies above with a huge amount of stock out. Share structure is critically important in this market.

The two stocks above have done exceptionally well even with a large amount of stock outstanding, so if SPY can attract a large investor audience this year, they would move that much quicker.

The global mobile advertising market is very large and very valuable. Everyone from Google down is hunting for new ways and new technology to squeeze more advertising dollars out of mobile phones and tablets.

Sprylogics is a young company but with very innovative mobile advertising technology. Their mobile phone app has been downloaded more than 25 million times and they continue to look for partnerships that will hopefully lead to a buyout. In September they partnered with Booking.com and in October it was Groupon.

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Their recent entry into Fantasy Sports may generate the investor audience they need in Q2/15.

Fantasy sports are a huge market with 33 million Americans spending almost $4 Billion annually. Revenue growth is forecast to be 7.6% over the next several years.

The new “Breaking Sports” app will soon be marketed on FOXSports with 5 million weekly listeners on 400 radio stations.

SPY’s new technology will use algorithms to continuously scour the Internet for news, stats, and information “specific” to the individual Fantasy Sports player. The APP will push alerts on breaking news, statistics, injuries, trades, line-up changes, rumours, etc.

“By utilizing advanced artificial intelligence techniques, Breaking Sports can detect events as they happen and as they are announced in social media, determine nature of the events, attribute events to participants, summarize source articles, index the underlying information, provide search of events and articles, and send alerts to fantasy players, sport fans and enthusiasts.”

While the current real-time semantic processing pipeline understands North American football, basketball, baseball and hockey, it can be easily configured to include other sports, as well as potentially other categories of information, ushering the era of real-time news subscription for any topics of choice.

The average Fantasy Sports player in the U.S. spends $111 per year on league-related costs.

January Corporate Presentation:

https://www.breakingsportsapp.com/wp-content/uploads/2015/SPRY%20Presentation%20January%202015%20(12.30.14).pdf

You can listed to Danny Deadlock and hear him discuss his approach to picking stocks by clicking on the Podcast below.


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Disclosure: Danny Deadlock owns 50,000 shares of SPY _________________________________________________________________________


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Comments

Take a look at RRS. They have more cash on hand than their market cap. Three great properties with the main focus now on their high purity silica property in Quebec. Higher grades than the neighboring silica quarry that has been in operation for 50 years and has annual revenue in the $20 million range. http://www.stockhouse.com/blogs/top-pick/march-2015/high-purity-silica-project-immense-upside
(0)
March 16, 2015

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