BrandPartners Group, Inc. (OTCBB: BPTR) provides next generation retail environments through existing branch roll-out solutions and turnkey real estate services, which include site selection, strategic market intelligence, brokerage services, full-service design and build, green audits and implementation, space planning and contract furniture solutions.
In our opinion, BPTR is well positioned to benefit from the numerous changes in the banking and financial services industry, as well as from its entry into turnkey retail environment solutions for the rapidly expanding Retail Franchise Industry.
A world of opportunity has been opened up by the mergers between Bank of America, Countrywide, and Merrill Lynch; J. P. Morgan and Chase; Wells and Wachovia; BBVA and Compass; and Sovereign/Banco Santander. These are only a few of the deals that require the services of BPTR to create a consistent brand. Also, it is likely that there will be further consolidations in the industry, which create even more opportunities.
BPTR is also well positioned to take advantage of the current trend of non-banks like Charles Schwab and Wal-Mart getting into banking. In order to develop a consistent brand strategy, these companies will need the expertise of a firm like BPTR. Finally, the conversion to bank holding companies by companies like Morgan Stanley and Goldman Sachs could lead to new bank networks that again would require the services of BP.
Time to Buy the Stock
In our opinion, BPTR could be one of the most undervalued small-cap stocks trading on the OTC Bulletin Board. With a market capitalization of only $3 million, BPTR boasts $34.3 million in trailing 12 month revenues. With the stock trading at $0.04 per share, BPTR showed almost $0.01 per share in cash at the end of the most recent quarter. With 19.5% of the stock held by insiders and only 3% held by institutions, in our opinion, shares of BPTR have tremendous upside potential. Not only is the stock price undervalued, but the company is turning in stellar results.
In a tough economic environment, BPTR continues to prove itself a well managed company. For the nine months ended September 30, 2009, BPTR posted a small loss of $1,297,649.00 on revenues of $25,352,988.00 for a $0.03 per share loss. For the same period in 2008, BPTR showed a small profit of $582,476.00 on revenues of $26,94,801.00 for a $0.01per share profit. As of September 30, 2009 booked orders for the Company, consisting of signed contracts not yet completed, totaled approximately $7.7 million. For the nine months ended September 30, 2009, one customer accounted for approximately 24% of the Company’s revenue.
For the three months ended September 30, 2009, one customer accounted for approximately 23% of the Company’s revenue. Accounts receivable for this customer as of September 30, 2009 were approximately $400,000.00, which is a fraction of overall revenues.
Technically, BPTR is ripe for a move. One of our favorite technical indicators, the Stochastics, is deeply oversold and appears to be turning higher. This is very bullish and may be suggesting a big move higher could be on the way. Another favorite indicator, the MACD, is above the "0" line which is very bullish. It suggests the stock is in a "strong" bullish trend. We have also seen some encouraging upside volume spikes that have come into the stock over the last several weeks as the 50-Day Moving Average crossed the 200-Day Moving Average. As a result, we believe BPTR may be under heavy accumulation.
We believe investors can add shares of BPTR to their portfolio at this level and expect a strong five to ten-fold move in the stock price.
Green and Energy Efficient Environments
BPTR is a member of the U.S. Green Building Council and recently launched its Green Directions consulting services, which will provide counsel to institutions considering sustainable building and design solutions. It is estimated that in 2010, the commercial and institutional market for green building projects will approach $10-20 billion according to McGraw Hill Construction. In fact, if only 10% of the 100,000 branches in the U.S spent $50,000 to upgrade their energy efficiency, the market opportunity would be $600 million.
With the benefit of BPTR end-to-end spectrum of expertise, the new consulting services are positioned to provide expert advice for every stage of a construction or renovation project. BPTR's Green Directions consulting services assists clients with decisions at every stage of their project. For instance, BPTR's design/build division can provide guidance on everything from making the most of local natural resources to leveraging day lighting to minimize HVAC costs. BPTR works with the client to ensure a green solution that is not only cost-effective, but will deliver a return for the client for years to come.
BPTR Products and Services
BPTR serves an evolving industry, helping retail networks transform uninspiring environments into dynamic customer experiences, or continuously enhance more sophisticated spaces. BPTR’s solutions help clients engage customers, cross-sell products and services, and communicate a consistent brand identity across a retail network. The integrated solutions BPTR offers are designed to maximize the efficiency of branch environments, enhance customer and employee experiences, and optimize retail network profitability.
BPTR works with financial and other retail organizations to positively influence consumer buying behavior through brand translation, creative services, retail merchandising, retail digital networking, integrated design/build and space planning services, and strategic market intelligence.
It's no secret portfolio managers like Larry Haverty of Gabelli Global Multimedia Trust (GGT) have been accumulating shares of retailers to take advantage of the economic recovery. In our opinion, small-cap investors can make the same moves as the big players by snapping up shares of BPTR at these discounted levels.
Target Markets
BPTR's revenues have historically been derived primarily from clients in the financial services markets. This includes retail banking organizations, bank holding companies, and thrifts with anywhere from one location to thousands of locations. BPTR also does business with a large number of brokerage houses, mutual fund companies, asset management companies, insurance and mortgage companies, and tax services companies.
Basically, any retail industry or service organization can use BPTR's capabilities and expertise in the retail environment. As a result, BPTR is able to focus on industries that have synergies and parallels to its core industry.
Because of BPTR’s position in the retail financial services marketplace, it can service the needs of clients ranging from the non-standard lending market, credit unions and community banks, regional banks and the largest financial institutions. BPTR employs a proactive sales force, which markets its products and services to targeted companies through trade shows, direct marketing, email marketing, industry publications, speaking engagements, and company-sponsored events.
Since BPTR outsources most of its manufacturing and fabrication services, the Company does not own or operate manufacturing facilities. Most outsourcing is project specific, based upon branch locations, and the nature of the products and services provided. Since the majority of the product produced for customers is project specific, BPTR is not required to maintain a large inventory.
Store-in-a-Box
Store-in-a-Box is a provider of turnkey retail environment solutions for the rapidly expanding Retail Franchise Industry. Following BPTR’s Green Directions consulting services division launched in July, Store-in-a-Box is the company’s second endeavor this year to diversify revenue derived from offering new services or entering new industries by leveraging core business strengths.
By leveraging the company’s design, project management, construction, and supply chain strengths currently servicing the financial services industry, Store-in-a-Box will offer services ranging from initial store design to complete store opening solutions for franchisees. Many of the services include millwork, graphics, point-of-sale, merchandising, signage, carpeting, space planning and contract furniture, and general contracting services. According to the International Franchise Association, franchise businesses play a critical role in the U.S. economy. More than 900,000 franchise businesses operate in the US and provide for 20 million jobs and $2.3 trillion in economic activity.
In our opinion, franchise businesses are a large component of the economic cycle for income and job creation in the US. Launching Store-in-a-Box is a natural extension of BPTR's core business and allows the Company to leverage its design, project management and logistics infrastructure to create efficiency throughout the organization. Furthermore, as the economic climate has changed the industry landscape, it is important for any company to diversify its revenue stream and use its assets to pursue other markets that have strong growth potential.
Store-in-a-Box Management
Bruce Olans is a successful entrepreneur with more than 25 years of experience offering franchisors store implementation build-out solutions, which allow their franchisees to focus 100% of their pre-opening time on marketing and business development rather than acting as a general contractor. Bruce has joined BPTR as CEO of BPTR’s new Store-in-a-Box’s Division to help launch services. Because of the arsenal of tools offered through Store-in-a-Box to franchises, the ability to open quickly and efficiently is undeniable. Costs are decreased significantly, implementation time can be driven from months to weeks, and complete store installations are done in a day and a half.
With more than 50% of franchise organizations lowering startup costs, it’s easier than ever to get into the franchise business –Store-in-a-Box solutions aim to help franchisees launch their businesses and open as quickly as possible. It’s all about making it possible for a franchise owner to focus on what’s important to them, which is creating a profitable business operation with lower start-up expenses. A partnership between Store-in-a-Box and BPTR does just that. Owners have better things to worry about than the installation of the lighting or where their merchandising elements should go. Mr. Olans has worked with some of the most well-known franchise brands including Stanley Kaplan, Jenny Craig, T-Mobile, Sprint, Weight Watchers, iSoldIt, and a new healthy restaurant franchise company called UFood Grill launched by George Naddaff, founder of Boston Market – to name a few. BPTR invites any interested parties to visit www.storeinaboxassociates.com for a visual overview of the Store-in-a-Box concept.
Summary
In our opinion, BPTR is one of the most undervalued small-cap stocks on the OTCBB and could easily become a 5 or 10-bagger once investors start to realize the potential, which should be soon. We could see shares of BPTR explode higher as the market realizes the potential the company has to generate revenues and earnings in excess of the industry norm.
With the recent wave of mergers in the banking and financial sector, institutions will need the services of BPTR to develop a consistent brand strategy. In addition, we believe BPTR will enhance its bottom line through the additon of the Store-in-a-Box concep, which offers turnkey retail environment solutions for the rapidly expanding Retail Franchise Industry. Led by competent and credible management, we believe BPTR could be one of the top performing OTCBB stocks for 2010.
In our opinion, opportunities in the stock market are not always as clear as BPTR and certainly do not happen often. Due to the low valuation, we believe BPTR has limited downside and tremendous upside potential.
