iGo Inc. Powers Up Impressive Gains

Portable power-solutions provider, iGo Inc. (IGOI), appeared on our radar this past week after it announced a partnership with Verizon Wireless (VZ) to sell its new iGo Netbook Charger in 2,400 stores across the country. The chargers are lightweight, ultra-portable and utilize a patented tip technology allowing users to power-up their portable devices regardless of where they are – home, office, car or plane. For the busy traveler, the iGo Netbook Charger also has international voltage capabilities, eliminating the need for extra converters while abroad.

When you stop to consider how portable electronics have begun to enjoy the ubiquity of cigarettes in the 1960s, the appeal of this product and iGo’s stock starts to make a lot of sense. To that end, the positive catalysts for IGOI are also becoming apparent in the market.

A recent MarketWatch.com column mentioned IGOI was well positioned to benefit from the increasing popularity of netbooks, which are expected to increase by almost 100% in 2009.

iGo CEO, Michael D. Heil also commented,

Verizon Wireless is a driving force in the growth of netbooks and we are pleased to work with them to address the emerging power needs of their netbook customers.

Source: iGo.com

IGOI also considers its product-line eco-friendly or “green” given that the chargers save electricity and often pay for themselves within one year. The company’s “anti-vampire” products cost around $30 and put an electronic device, like a printer, into sleep mode allowing the device to power down. This process saves about 80% of the electricity or “vampire power” a device typically consumes while in normal mode.

In an adroit move by management, IGOI will be including “green” in its marketing initiatives for their new products, slated to be rolled out by Christmas. It would seem a no-brainer for any Mad Men worth their salt to see the ad potential of “green power” as this year’s favorite stocking stuffer. We’re hoping Santa sees it our way as well.

With IGOI’s closing price of $1.25 on Monday, the company’s market cap stands at approximately $40.5M, with a price-to-sales of 0.58 – an attractive ratio from a value perspective. Essentially, it means you are paying $0.58 cents for every dollar of sales. IGOI is not currently profitable so there is no PE, but its EBITDA (earnings before interest, debt, taxes and amortization) of -$0.1M is elucidating because it reveals IGOI is burning through very little cash and is close to breakeven on an EBITDA basis.

Furthermore, the company currently has no debt and $1.05 per share in cash which equates to buying future earnings for $0.20 a share!

IGOI 6-Month Chart

Source: StockCharts.com

Please keep in mind, IGOI is not without its inherent risks. In micro-cap situations like IGOI, you must factor in the illiquidity of a stock which trades less than 100k shares per day; the size of the company with less than $100M in yearly sales; and, of course, the low gross margins.

However, when we step back and consider the IGOI story and its growth potential, we believe the positives outweigh the risks and the market will think so too. We are continued buyers of IGOI on pullbacks to $1.15-1.23.

IGOI STOP LOSS: $0.89

DISCLOSURE: Long IGOI

Comments

[Jae Jun:]

What's great is that IGOI was trading below its net net working capital only a few months back.

Thankfully I was able to get in early when I first started covering the company at 55c.

IGOI new distribution agreements and exposure is doing great for the company. Finally getting back to where it should be.

cheers,
www.oldschoolvalue.com

Sep 22 01:49 PM

[The Inflect...:]

Nice pick up. Wish I was there with you then, instead of discovering the name last week. best, John


On Sep 22 01:49 PM Jae Jun wrote:

> What's great is that IGOI was trading below its net net working capital
> only a few months back.
>
> Thankfully I was able to get in early when I first started covering
> the company at 55c.
>
> IGOI new distribution agreements and exposure is doing great for
> the company. Finally getting back to where it should be.
>
> cheers,
> www.oldschoolvalue.com

Sep 22 05:00 PM