100x opportunity in the US stock market?

In other words, in 2011 very few would have dared to buy Bitcoin, even if they had the chance to do so. Worse, the reality is that today it is very difficult for the retail investor to find these types of opportunities, especially in the stock market (it is a little more likely to find them in crypto).

This is because many of the companies go public when they already have astronomical valuations. This is a trend that has deepened in recent years. For example, Uber did its IPO with a market cap close to US$70 billion. AirBNB began trading at a valuation of $80 billion, while Coinbase’s was $64 billion.

In this way, although it is possible to find good investment opportunities, it is difficult to find asymmetric opportunities that allow generating exceptional returns.

However, there is one company in the OTC market that presents an asymmetric opportunity: it is Tricascade Inc., a subsidiary of Saddle Media Ranch Inc., which trades under the ticker SRMX (the shares that are listed and can be bought are those of Saddle Media Ranch Inc.).

Let’s start at the beginning. An over-the-counter market, also known as an over-the-counter (OTC) market, is a place where financial instruments, such as stocks, bonds, commodities, swaps, or credit derivatives, are bought and sold directly between two parties. The difference is that this trading does not occur on a centralized stock exchange, but rather takes place outside of those organized markets.

Tri Cascade is a technology company specializing in “Internet of Things” (IoT), with offices in California, Taiwan, and recently opened a business office in Chicago. Hand in hand with its CEO, Max Li, it has been working exclusively on the development of IoT products and services for several years. And its shares are traded on the OTC market.

They have recently launched a new product on the market: the “VOS 5G”, a portable device that allows high-speed internet connection and securely for laptops, tablets and desktop computers, without depending on WiFi, giving 5G internet access through a SIM card. The company has reached a special agreement with T-Mobile to offer different monthly internet plans for your VOS and it can already be purchased through its website or directly on sites like Amazon (Newegg coming soon).

Now, there are many reasons why shares of Tricascade (SRMX) may have enormous potential.

First of all, the launch of the new product (VOS 5G) is especially important because if it is sold and generates relevant income, it will allow the company to develop its full potential. This could be the “catalyst” that gets it off the ground.

It must be remembered that Tri Cascade is currently in its initial stages. For the past few years, the company has been in the product development phase and is still working to generate a steady stream of revenue. However, it has made significant progress. It has successfully obtained all the necessary certifications (FCC and PTCRB) for the VOS 5G device, and the product is now ready and available for sale, with 5,000 units in inventory. Consequently, it is currently in the launch and sale phase of its 5G VOS, with the goal of achieving stable revenue streams in the near future.

According to its latest quarterly balance, in addition to the VOS, the firm has another 7 lines of products and services under development. And to this we must add a new smart bike with a real-time geolocation system (recently announced).

On the other hand, it should be noted that Tri Cascade is expanding its team with the opening of a marketing and sales office in the city of Chicago. In addition, a line of credit of up to US$16 million was secured to be able to finance the VOS inventory and have the capacity to sell the product in retail stores.

Another important point to take into account is the important connections it has with technology giants. In this regard, just to mention some of these ties, in 2021 he actively collaborated in an autonomous vehicle project backed by T-Mobile. It also has agreements with Microsoft (its division linked to IoT) and even the design and production of VOS 5G was done through an agreement with Compal Electronics (Taiwan computer giant).

Valuation

In terms of valuation, the company currently has a market cap of approximately US$5 million. The price of its shares has been trading in the 0.0003-0.0007 range for more than a year, representing a 98% drop compared to the almost 2 cents reached in February 2021.

The current valuation of the company is extremely low, considering the current state, its future potential, and even when compared to the valuations of other companies in the OTC market. Here’s another key to why there’s great opportunity with Tri Cascade stock.

Let’s see the following. The pessimistic scenario is very clear. If the company fails to generate income, it will have to continue borrowing and issuing shares to survive. You could even end up bankrupt. That is, in the worst case scenario, your shares could go to zero and you could lose 100% of what you invested.

But, what could be the potential in a positive scenario? That is, how much could the company be worth if it successfully starts selling its product?

I think it is worth illustrating this point with a theoretical scenario. To do this, I am going to take as a reference the 20 largest technology companies on the US stock market (source: finviz.com), which today have an average valuation of 9 times sales (taking the Price to Sales ratio). With this data we could assume (as a “proxy”) that the market gives a valuation of 9 times sales to an attractive technology company.

Based on this assumption, let’s imagine the potential that Tri Cascade shares could have in 3-5 years if they manage to successfully bring 5G VOS to the market and have significant annual sales. How much could their shares be worth?

Continuing with the exercise, if you manage to sell 100,000 VOS units in one year, with a P/S of nine you would reach a market cap of 315 million dollars, and a price per share of 0.026 cents (multiplying its current price by 64).

And an even more optimistic scenario, where it manages to sell 2,000,000 units per year,

its shares could exceed 50 cents (multiplying by more than 1280 times its current value).

These numbers may seem high but they could happen in an optimistic scenario.

For reference:

• Apple sells approximately 200 million iPhones per year (source: statista.com).
• In 2022, it sold a combined 87 million units of IPads, Macs, and Macbooks (source: https://www.businessofapps.com/data/apple-statistics/).
• There are more than 300 million people with Internet access in the United States and more than 5 billion worldwide (source: Wikipedia).
• T-Mobile has more than 110 million customers in the United States (source: statista.com).

This exercise should not be taken as a valuation of Tri Cascade, it is merely intended to illustrate the enormous potential that its shares can hold.

In addition, these assumptions only take into account the VOS, other sources of income are not being considered. This is especially important, since in case of being able to generate income, it is expected to see a rapid launch on the market and sale of other products that the company is developing.

The point here is this: when analyzing an investment opportunity, it is the risk/return ratio that matters. And in this way to be able to position yourself adequately managing the risk.

In this specific case, managing the risk would mean investing what one is willing to lose, since if it goes wrong, 100% of what was invested can be lost, and if it goes well, the original amount can be multiplied many times.

Final comments

Investing is a probabilistic activity. Bitcoin could have failed, just like Apple or Tesla. But, what cannot be denied, is that they presented unique investment opportunities if we analyze the risk/return ratio, that is, what one risks against the upside potential.

The same is true of Tri Cascade stock today (remember, Saddle Media Ranch’s stock is trading under the ticker SRMX). They have an excellent risk/return ratio. Even though 100% could be lost, the upside potential makes it a very attractive opportunity. The key is to manage risk and not invest more than you can lose.

To recap, here are a few reasons why Tri Cascade has tremendous potential:

• Pure play in IoT (this is important as many IoT companies like Microsoft have other business divisions as well)
• Launch and sale of VOS + possibility of starting to generate revenue
• Recent hires + commercial office in Chicago
• Line of credit to secure inventory
• Ties with tech and communications giants
• Extremely low valuation & huge upside potential

It is worth remembering that the Internet of Things (IoT) market is booming. It will probably be one of the fastest growing areas of technology in the coming years. In this regard, according to the “Fortune Business Insights” portal, it is expected to grow at a compound annual rate of 26% between 2023 and 2030, reaching over US$3.3 Trillions in size for that year.

In conclusion, there are plenty of reasons to have high expectations with Tri Cascade. It must be remembered that these are risky actions, like all those in the OTC market. Unlike some others though, there are huge reasons to be bullish.

And in particular, the recent event of the launch of VOS 5G to the market could be the catalyst to generate sales and finally see a skyrocket in its share price.

This is a great advantage, as there is a tangible product that can be purchased (something that does not happen very often with OTC stocks).

To finish, I want to invite you to download a free report with 7 actions related to cryptocurrencies, with a lot of potential if the crypto world continues to consolidate. You can download it here: Financial Letter – actions.

Note: The material contained in this note should in no way be construed as investment advice or a recommendation to buy or sell any particular asset. This content is for educational purposes only and represents the author’s opinion only. In all cases it is advisable to consult a professional before investing.

Source: Ambito