Nikolay Tomov
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SelectCore Ltd. (CVE:SCG), (PINK:SLXXF) Continues Dropping After the New High

by Nikolay Tomov May 25, 2011
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This month began like a dream for the stock of SelectCore Ltd. Within two weeks, the shares (CVE:SCG), (PINK:SLXXF) climbed from $0.20 to $0.71 on the price chart, noting a new 52-week high of $0.78 in mid-May. It looked as though nothing can stop them. Every dream, however, has its end. For SCG, the dream seems to have come to its end. This should be hardly upsetting for the company, though.

SelectCore_-_Chart_for_25_May_2011.jpgImmediately after setting its yearly-peak, the stock began losing ground and dropped in value. During the last five sessions, the shares lost about 25%, slipping to $0.53 yesterday in the end of the trading. This should be considered as no big surprise. It is normal for a stock to decline after setting a new high. Maybe, it is more important whether the fall will continue in the days to come.

To this, we can give no easy and definite answer. On one hand, SeletCore's fundamentals do not seem solid enough to aid a significant rise in the share price. The latest financials reveal not a very lovely picture. In the end of 2010, the company's total liabilities exceeded the total assets, and there was working capital deficiency of $5.17M. Besides, SelectCore recorded a net loss of $1.1M in 2010.

The bearish MACD cross-over also implies a possible continuation of the shares' decline.

Now, time for the other side of the story - the bright one. In 2010, the company reported revenues of $103M - 23% higher than the 2009 earnings. The gross profit has also risen. In addition, several favorable company developments and events might help the future stock's performance too.

In April, SeletCore signed a three-year contract with "a leading international mobile-top-up provider" who intents to use the company's PrepaidONE technology platform. Earlier this month, SeletCore entered into a 5-year exclusive distribution agreement for the sale of Iridium MasterCard in over 200 retail locations, including shopping malls across the Greater Toronto Area. A week ago, the company disclosed very encouraging performance indicators by the Card for the first quarter of 2011.

SelectCore_-_Logo.jpgThis all sounds good indeed. Is it enough, however? As the financial figures and the fundamentals suggest, SelectCore is still in the red with expenses prevailing over the revenues. That is why the company continues to incur losses. Hopefully, this will soon turn around for the better.

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