Manny Backus and the folks at Wealthpire have been promoting a service they call Consensus Picks, which they say lets them zero in on the top picks of 800 top trading services and choose the best ones — those that are picked by several services and that they select as the best of that bunch.
There are several well-established newsletters that digest other newsletters and choose favorite picks from the universe of investment advice (like the Dick Davis Digests, the Bull and Bear Financial Report, or Hulbert’s Financial Digest to some degree), so that’s not a whole new concept, but this one is pitched as having an expensive and fancy computer system that’s fed these stock newsletters and then churns out the best ideas for Manny to select from. Wealthpire is an extremely active advertiser (including on this site sometimes, and far more widely in places like the Wall Street Journal and Barron’s), but the actual process is not particularly transparent — that publisher has grown quite a bit to offer a number of investment advisories and newsletters, but we’ve had few subscriber reviews and don’t know their track record at all.
There is still what looks like an older ad up for this Consensus Picks letter, from roughly a year ago if we go by the charts that are included in the ad, and that ad recommended MCP, MIND, CTCM, NM and V — if you had bought and held them a year ago you’d have done worse than the market thanks to bad years from MCP and MIND, but I have no idea whether this is a service that holds for a long time, what buy prices might have been, or, indeed, how they get to their sell recommendations at all.
But still, we like to sniff out ideas from every corner — and folks have been asking about this one, so what are those “consensus picks?”
Here’s how they’re teased:
- TOP STOCK #1: “The Niche Tech Dominator” – This micro tech firm is preparing to take over a $723-million cyber security market.
- TOP STOCK #2: “The Sales Generator” – This outfit develops proven tech-based solutions to help other companies boost sales.
- TOP STOCK #3: “Apple’s Secret Weapon” – Apple depends upon this company to manufacture a part that goes into every iPhone. Company insiders recently scopped up $700,000 worth of company stock.
- TOP STOCK #4: “Under The Radar Drug Maker” – This company opened up a hot new profit center worth hundreds of millions. Yet the company is valued at about half of its acutal sales.
- TOP STOCK #5: “Drilling For Big Profits” – This company is poised to profit from the surge in oil exploration as America presses towards energy independence.
OK … so that’s the big tease. How about some clues about these specific picks?
He pushes the first one as his favorite, so we’ll look at that, well, first:
“Top Stock #1: ‘The Niche Tech Dominator’
“This is THE one pick I’m most excited about….
“One of the primary sources of network infiltration and data leaks is… email.
“Approximately 123 million businesses in North America use email to transact business and communicate within the organization. Yet only 13 million of these businesses — or just 10.5% — protect their email correspondence.
“Those millions of unprotected corporate email accounts — and unprotected government and personal email accounts as well — are a gateway for criminals, spies and hackers.
“And THIS company offers the perfect solution…
“In fact, Google only sells this company’s email security products and services.
“Because the company has developed innovations that are second to none. It’s software-as-a-service solution allows the use of Internet-based email for sensitive information exchange. Messages are secured by a proprietary system. Users can then send their email message to ANY email address. The software determines the direct and appropriate means of delivery. So no unauthorized outsiders can read the message or any attachment….”
And then we get a laundry list of hints:
- “Revenues have grown for 15 straight quarters.
- New orders are up a stunning 58% for the last quarter of 2012.
- Profit margins soared to an unbelievable 58%.
- The gross profit margin is at 83%.
- The company boasts a 98% customer rate of retention.
- Approximately 80% of customers sign a 3-year contract.
- Dominant player in the healthcare, finance and government market.
- Spearheading new products in the fast-growing mobile market.
- Strategic partners with Google, Symantec, Code Green Network and Webroot.
- Analysts agree this stock is grossly undervalued selling at roughly half it’s real worth….
“Compliance initiatives… at the federal and state level like PCI, HIPPA Act, HITECH Act and Gramm-Leach-Bliley Act… all but mandate email security for companies. Healthcare, finance, government and other entities must, by law, implement these new regulations. Or face stiff penalties for data breaches.
“Based on my exhaustive research, this micro tech will dominate the $723-million email cyber security niche in 2013.”
So who is it? Thinkolator sez this must be: ZixCorp (ZIXI), which is a small cap email security company (market cap under $200 million) that I had never heard of before today. Gross margins are not all that meaningful for a technology company like this, since as you can imagine their selling and administrative costs are much higher than the actual per-customer cost to deliver the product, but that “gross profit margin” is at about 83%, they are very much dependent on healthcare, finance and government customers, with health care being by far the largest segment (as you can imagine — secure email is key for privacy, and healthcare information exchange is heavily regulated). The other clues match, too — though the very high profit margin (that 58% number) looks like it was really just for a tax credit in one quarter — their average “real” profit margin is wildly variable by quarter but has recently been in the high teens or low 20s.
They essentially operate a cloud based encryption network for emails, making it easier to send encrypted messages via email so they can’t be read by the unintended recipient, and they say that their solution is cleaner, easier and less of a pain in the neck than exis