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Investing in Credit Card Makers The Sleuth
But the technology has improved. Credit cards have magnetic strips that instantly record your payment. And almost every merchant in America -- even McDonald's -- now takes plastic. ******************************** $161,118.95 Gains in 1 YEAR Options guru Steve Sarnoff had a perfect record in 2005: He recommended 30 plays and EVERY SINGLE ONE saw gains -- totaling a possible $161,118.95...You could join a small group of readers that has already had the chance to reap $1 million in profits... Just check out this special report... ******************************** The massive popularity of credit cards has created two reasons they will experience more makeovers in the coming years: convenience and identity protection. And there's one virtually unknown small company I've found at the forefront of this movement. More on this in a minute... First, it's important to look at how this isn't just a story about credit cards, but about how innovative companies are finding better and easier ways to store and transfer all types of information. From Film to Digital Creating new ways to read and store information has become a very important industry. Just look at how far photography has come in just a few short years. In the '90s, most photographers -- professionals and novices -- used standard film. But now that digital photography has become practical for Average Joe, film has been relegated to the sidelines. Consider this: Even cheaper digital cameras can offer users excellent image quality, along with the luxury of not having to worry about wasting film (and the money to process it). The only thing a digital photograph "wastes" is memory space. And that's where the technology comes into play. Coinciding with the advances in digital cameras has been the improvement in the equipment used to store the electronic information. I remember several years ago when some of my braver, more technologically-advanced friends were experimenting with digital cameras. These early prototypes ate up batteries and were only capable of storing 20-30 images before they had to be transferred to a computer's hard drive. Then along came companies like SanDisk (SNDK: NASDAQ) that developed better, cheaper flash memory cards -- or memory sticks as some call them -- to store all of those images. SanDisk has successfully developed and marketed plenty of affordable flash memory devices for video game systems and digital cameras. ******************************** The One Tech Stock You Can't Afford Not to Own One small tech company is strongly positioned to score billions in a patent lawsuit against an industry leader... Act fast and you can get in on this tiny stock before a likely out-of-court settlement sends it soaring 20-fold -- which could happen any day now. Read all the details in this special report... ******************************** Even my cell phone came equipped with a very tiny SanDisk flash memory card. It's no bigger than a fingernail and can store 512 MBs of pictures and other info. It's these kind of innovations that have helped transform SanDisk from a stock that used to trade for a couple of dollars into a $10.5 billion empire and an incredibly popular stock on Wall Street. Those who recognized SanDisk's potential early had the opportunity to make their own fortunes as well. Your New Credit Card Here's a company that's changing how your credit card and other personal information is processed. Thanks to On Track Innovations Ltd. (OTIV: NASDAQ), the art of buying stuff you don't need just got easier. On Track is a developer of new ways to identify and authenticate information. And you might even use some of On Track's technology and not even know it. On Track has developed a product line called the SmartID, a technology that can allow access control (programmable keycards), electronic ID cards and even e-passports. But the company is probably best known for developing the key fob technology available at gas stations. The idea of waving a key fob in front of an electronic reader has led to the development of contactless credit cards. Your card is implanted with its information and all you have to do is wave it in front of a reader. You don't have to worry about damaging the magnetic strip or handing off your credit card number to a dishonest clerk. As On Track puts it, "Customers love the experience of presenting the contactless card and not having to hand the smart device, be it a card, key fob, or mini-card, to a store associate accentuates the feeling of transaction security in today's world." In 2005, one CNN report said that JP Morgan Chase would be the first to issue this kind of technology on its Visa and Mastercards. To put this market in perspective, consider this: As of 2005, JP Morgan Chase had about 94 million credit cards in circulation. And On Track also delivers new technology to other markets worldwide. The company developed electronic passports for Poland, EasyFuel solutions for Costa Rica and "Tap & Go" payment stations in New York City's subways. The Road to Profitability On Track Innovations is a tiny company, with a market cap of only $110 million. On top of this, On Track is in the red and its share price has hit the skids lately. So this is a volatile stock and just about as speculative as they come. Just check out its performance over the past year: As you can see, the share price has dipped from around $17 in February to less than $8 today. However, On Track's revenue has grown considerably, posting $23 million in 2004 and $35 million in 2005. And it looks as if the company is on track to post around $40 million this year. On top of this, On Track is sitting on about half its own market cap in cash. The company has $54 million in cash and only $1.4 million in long-term debt. Despite a long string of negative earnings, some analysts are predicting On Track to attain profitability by 2007. And with technology improving and more and more consumers abandoning cash in favor of paperless transactions, On Track could be a good tech addition to a small-cap portfolio for an investor who doesn't mind the huge swings. Best,
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Greg Guenthner is a contributing editor for Small-Cap Strategy Report and has helped in developing the Million Dollar Portfolio... <click here for full bio> |
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