Stock Gumshoe

I’ve gotten this email myself a few times, and had it forwarded by a few readers — it tells a David and Goliath story about a medical device manufacturer, and it’s trying to sell us on a subscription to Navellier’s Quantum Growth service.

Here’s the basics:

This inventor came up with a better catheter, one that prevented infection, and got it approved by the FDA way back in 1998.

It was clearly a better mousetrap, but the big companies conspired to keep it out of hospitals and they couldn’t get access to the big hospital market — as you can imagine, the straight-to-consumer market for catheters is somewhat limited.

So this inventor, Jim Conway, hired a lawyer (one of many who spearheaded Vioxx lawsuits against Merck).

Eight years later, the big distributors and pharma companies capitulated and paid him $60 million and gave him access to 1,500 hospital accounts.

Which means the company is now profitable … and in Navellier’s words:

“What was recently a $5 stock a year ago is, according to my research, on its way to being a $50 stock in 2007.” (it’s just over $20 at the moment, FYI)

Other tips to confirm the stock, which you may have guessed by now:

It’s up 82% on the year.

It jumped 51% after their last earnings release.

So we put that pile of data and teasers into the great big Stock Gumshoe thinkifying calculatometer … and we discover that …

… this company is …

Rochester Medical (ROCM)

A quick look at the chart will confirm that the stock price movement data matches the tease — and the easy answers are provided by looking at the major holders of the stock, many of whom are in the Conway family. If you want to read a bit more about this one, there’s a nice Forbes article from a couple weeks ago that goes into some more detail on the story.

Is it a good investment? Beats me. The company is very cheap if you look at the trailing PE, though I expect a big part of that is probably the lawsuit money. If they’ve really invented a better catheter and have the capacity to get it out to all those hospitals they now have access to, this might just be a great Peter Lynch investment — buy something that no one really wants to think about, and that is as far from glamorous as you can get. I know I want to read as little as i can about catheters, frankly, it makes me squirm in my seat a bit too much, so I don’t expect I’ll be buying into this one.

Whether or not it’s for you is, of course, something only you can decide … now that the Stock Gumshoe has told you where to look. Best of luck.

A wee update for you on May 3: Rochester Medical got clobbered today and yesterday on disappointing results, so the shares are down dramatically (it had climbed up to $30 three days ago, now it’s at $17). That backward-looking PE of 6 now looks real enticing, though it might pay to notice that the forward PE at this quarter’s run rate would be right around 50 (I don’t think any analysts publish estimates). Just FYI … If you thought it was a bargain at about $22 when I first sleuthed it out, then perhaps it’s more of a bargain now, albeit one that has quite a bit further to go to reach Navellier’s $50 target.

A few readers sent this one in, and one of you had even figured out the company — great work.

Here’s what we’ve got:

The tease ad is from Quantum Investor/Quantum Confidential and Brian Hicks, as have been some of the previous ones I’ve looked at. This time, Brian wants to send you a report called Dawn of the Digital Video Revolution — if you’ll just subscribe.

And in that report, he’ll tell you about a company that’s “recommended by YouTube and Google” and has been called “the glue that holds the entire digital media marketplace together.”

Here are a few of the details:

Came public about six months ago, in September.

Located in San Diego, and has a brash CEO who aims to build the biggest company in San Diego (surpassing Qualcomm). (He was quoted to that effect in the San Diego Union-Tribune back in November.)

Market cap of $750 million (a bit less now, the company’s down about 20% on the year).

And he makes a bold prediction about the future of the company’s stock price:

“I’m talking about going from just over $23 to north of $303 per share in no time.” (made only slightly more difficult by the fact that the stock has dipped to about $20)

Put all that into the Stock Gumshoe cognification machine and we find out that this company is …

… drum roll please …

DivX (DIVX)

This is a digital video company, best known for the DivX digital video format that makes internet transmission standardized and easy. I’m no techie so I don’t know why DivX is any better than its competitors, but it is in very wide use and has been around for close to a decade, and they’re aiming to cash in on both the use of their technology and on the “community” of digital video uploaders and downloaders. T

hey just came public back on September 22, and they are profitable, so maybe there’s something there for folks who want to delve into it. There are plenty of competitors and related companies, including On2 Technologies with their Flash codec and the big guys like Microsoft and Apple, and I don’t really know where DivX stands in relation to them … or whether there’s any potential that they could be a buyout target, or a target for squashing, from any of the big guys.

I don’t know if the hyperbole about being the “next Cisco” will hold water, but I do know that you needn’t subscribe to an expensive newsletter, even for a “free” trial, just to find the name of the company they’re dangling in front of your eyes like a burro’s carrot. If you know more about why this company is or isn’t worth the money, feel free to comment here — I’m sure we’d all like to hear it.

The subject line of the email was enticing indeed — “Bigger than Amazon or Ebay!“

So what could it be?

Well, if you sign up for the research report from Brian Hicks at Quantum Investor (and consign yourself to a life of “free trials” and endless additional spam emails, perhaps), he’ll tell you.

Or, you could just ask the Stock Gumshoe!

Here’s what the email teased us with:

The headline practically screamed: “Company’s $5.25 stock could go as high as $21 in the next twelve months — but you need to get in now!”

Other clues to entice us?

• This $122 million online video company in San Francisco owns one of the fastest growing sites on the entire Internet.
• They are “the online version of the reality shows The Bachelor, Dancing with the Stars and even American Idol.”
• They have “an exclusive deal with a former American Idol champion.”
• “The company’s stock has already doubled since November… and Brian thinks it’ll quadruple in the next 12 months.”
• “The website was the 15,000th most visited site on the Internet 5 months ago. Today it’s the 1,148th most visited site.”

And if we put that all into the Stock Gumshoe sleuthometer machine, we get your results — no free trial, no need to submit a credit card.

The company they’re teasing about here is Go Fish (GOFH.OB), a little internet video upstart.

This is a recent IPO from late last year, though they’re not on one of the big exchanges (they’re traded over the counter).

They are really aimed at YouTube, though Amazon and eBay seem a bit out of reach to me. They do really have a former American Idol winner on board (if you go to GoFish.com you’ll see the prominently featured Taylor Hicks videos). From what I can tell, they really have grown their traffic just as dramatically as claimed in the email, at least according to their Alexa rankings.

For more information, their investment information page is available at http://www.gofish.com/corp/investor.gfp

Now, whether they’ll reach YouTube’s lofty status or not, or whether they’re worthy of your investment dollars, that’s for you to decide — but at least you don’t have to sign up with anyone’s investment advisory service, or even give them your phone number, to find out what the name of the company is.

And several public analysts provide some insight into Go Fish, too, though I don’t know anything about the company — if you’re interested, you might read the reports from Ant and Sons available at SeekingAlpha.