Ray Charles Couldn't Miss This Opportunity

Since Neutral Tandem is down about a dollar since I launched my latest telecom investment, I decided to review the wisdom, or lack thereof, of that decision. I remain convinced and Ray has to be with me. He would have been able to see the value if he was still with us and I'm sure he can see this no brainer from above.

Here are the fundamentals on TNDM:

Forward P/E 10X

Earnings Yield 10%

EV/EBITDA 2.7X

P/B 1.6X

ROE 19%

Cash per share $6

$184 million cash and NO DEBT

Negatives? Revenue growth has slowed as prices are coming down, but market share is growing as minutes handled is growing by 25%. This trend will likely continue, but the company has a neutral business model, it doesn't compete with its customers like other competitors do, and an amazing stable of customers. It's service offerings are growing and customers are buying more. An ethernet exchange is the next growth area, much larger than the current switching opportunity, and it has a leg up on its competition again due to its neutral positioning and established customer base. TNDM is priced like it is going out of business, but it isn't and that's where the opportunity arises.

Neutral Tandem presents at William Blair's Growth Conference on Wednesday. Maybe Ray and the Blues Brothers will help TNDM impress the Chicago investment house's attendees and the market will start to appreciate this very cheap stock.