NOTE: Just minutes ago, right after the market close [July 7, 2008], Michael Cohen, editor of the leading "Doubling Stocks" penny stock trading newsletter, divulged his latest pick: UOMO.OB...By Michael Cohen
Editor, Doubling Stocks
Company: UOMO MEDIA INC [UOMO.OB]
Yahoo Finance: http://finance.yahoo.com/q?s=UOMO.OB
Company Website: http://uomomedia.com/
This week's stock pick is one I've chosen twice already. The first time I chose UOMO [May 27], it rallied from $0.36 to $0.68 -- an 88% gain.
After this, UOMO slowly fell back to its former price level. At this point, I picked UOMO again, and the stock once again rocketed from $0.49 to $0.80, making for a second gain of 63.26%.
This week, I believe UOMO will once again repeat this pattern. Why? Let me explain...
Many people prefer to invest in a high-growth industries, where there's a lot of sound and fury. Not me. I prefer to invest in low-growth industries. In my stock portfolio, there are firms producing plastic knives and forks... And even funeral services.
There's nothing thrilling about a thrilling high-growth industry, except watching the stocks go down.
Carpets in the 1950s ... Electronics in the 1960s ... Computers in the 1980s... They were all exciting high-growth industries, in which numerous major and minor companies failed to prosper.
That's because, for every single product in a hot industry, there are a thousand MIT graduates trying to figure out how to make it cheaper in Taiwan. As soon as a computer company designs the best micro-chip processor in the world, 10 other competitors are spending $100 million to design a better one.
In a no-growth industry -- especially one that's boring or upsets people -- there's no problem with competition.
Why is this important to UOMO...? I'll explain in a moment. But first, let me remind you of the UOMO Media business model...
You see, the music industry is split into four key segments...
First, the "Recorded Music Producer." This is the person who actually gets in a studio and produces songs with the artist. They're usually also the firm who found the artist in the first place. They'll be paid a one-off fee, and most often a percentage of overall future profits the artist generates.
Secondly, the owner of "Publishing Rights"... Anyone can buy or acquire the rights to an artist's song. And this means every time the song is used in a film, advertisement or put on CD, the owner of these rights is paid a commission.
Thirdly, there is "Talent Management." This company manages what the artist actually does... If they go on tour, produce branded merchandise or CDs, this company will manage it and take a cut.
Finally, there is a relatively new addition to the process, "Digital Distribution"... These companies liaise with digital music portals like iTunes, Napster and Music Match. [For this service, they usually take a large cut of online digital sales.]
You get the point: The industry is fragmented into a bunch of different firms who all take their cut from what an artist or band produces.
Though profits in the industry have recently been declining -- and it is, in fact, the use of "Digital Distribution" which is the cause.
To put this problem in perspective, U.S. households are now buying twice as many "digital singles" as real CD singles. Profits of industry giants, like Sony BMG, have dived, especially as these online portals sell songs for as little as $0.99 or less.
This has surged the industry into a state of depression, and the uncertainty has lead to music properties [e.g., producers, rights, etc.] being sold far under their true market value.
You see, the main problem facing those in the music industry is decreasing revenues due to music now being sold online. However, UOMO Media has put itself in a position where it is they who profit from every part of the process.
UOMO Media consists of:
* UOMO Recorded Music
* UOMO Publishing
* UOMO Talent Management
* UOMO Digital Distribution
... Which, collectively, cover pretty much every service an artist requires.
UOMO Recorded Music is the arm of UOMO Media who will produce the songs by actually working with artists in their recording studio.
UOMO Publishing will then own the rights to the artists' work. This segment of the business will collect profits every time the track is played, and they'll take a percentage of CD sales.
UOMO Talent Management will then manage the artist as they go on tour, produce merchandise and create and sell CDs.
Finally, UOMO Digital Distribution will liaise with services such as iTunes and Napster to ensure the artist has a foothold in the online marketplace.
... For the artists this offers, what has been dubbed a "360 deal." They will only need to deal with one company [UOMO] throughout the entire process of creating, licensing and selling their work.
Now, a minute ago, I told you the reason I liked UOMO is because they are operating in a "no-growth" industry. That's not quite true.
We are listening to more music now than ever before...
Consumers have bought more than 100 million iPods since their November 2001 introduction, and the touring business is thriving -- earning a record $437 million last year.
The problem the business faces is how to turn that interest into money. With iTunes selling individual songs for $0.99 instead of full albums for $15.99...
And millions of savvy Internet users downloading tracks online for free, via P2P file-sharing programs...
The industry has been slow to adjust to these changes, and has left billions of dollars on the table.
This has surged the music business into a state of depression. In 2000, the 10 top-selling albums in the U.S. sold a combined 60 million copies. In 2006, the top 10 sold just 25 million.
In addition, more than 5,000 record-company employees have been laid off since 2000, and about 2,700 record stores have closed across the country.
Now, this doom and gloom may sound like a bad thing for UOMO...
But, the market has massively overreacted to this decline... Rights holders are selling rights back to music catalogues; producers are selling artists; and all for ridiculously cheap prices.
This has allowed UOMO, a small startup firm, to acquire a huge portfolio of music properties, including artists and rights to songs, etc.
And UOMO Media is in a spectacular position to monetize these undervalued music properties. How? By utilizing all four segments of the company -- i.e., UOMO Recorded Music, UOMO Publishing, UOMO Talent Management and UOMO Digital Distribution.
Where the previous producer of an artist would only make a cut of the profit, UOMO is able to extract as much money as possible by providing the "360 deal."
In fact, since I first picked UOMO, they have signed artist Random, and signed contracts with Tricky Stewart and Redzone Entertainment.
But, everything I've told you so far is simply why UOMO is a fundamentally strong company.
Investing, based on a strong business, can bring good returns -- but only in the medium- to long term [i.e., six to 12 months].
The reason I've chosen UOMO this week, is not because they operate in a "no-growth" industry...
And it is not because UOMO is growing rapidly, and will continue to grow...
You see, in order to fund this rapid growth by acquisitions, UOMO is spending money in raising their profile as a growing public company. This large-scale investor relations campaign could see millions of dollars flowing into this small public company.
Short-term, this could rocket the stock price, as UOMO has proven to be particularly volatile. In the past, even a small amount of investor interest has made UOMO almost double in price.
And so...
On the one hand, UOMO is a volatile stock. And, though this can mean big gains in a short space of time, it usually also comes with a certain amount of risk...
Which leads me to the second reason I chose UOMO...
As you probably understand, UOMO is a fundamentally strong penny stock which is growing rapidly. But, most importantly, the stock has found a floor showing a strong support level at $0.30.
This price support minimizes the risk of investing and allows smart investors to capitalize on the fact that UOMO is a volatile penny stock without the usual drawbacks.
Best Regards,
Michael Cohen
P.S. In summary... I think now is an excellent time to start researching UOMO Media. Everything I've told you is public information, largely ignored by the market...
To do your own research, I'd recommend reading through the past press releases to see the company's development, and reading their corporate website listed at the top of this e-mail [post].
ProsperNOW's take: Michael Cohen and his 100% automated stock-picking robot, "Marl," have helped penny stock traders and investors earn millions. UOMO.OB is well worth another look...
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