A modest up day for the DOW on Tuesday - although an encouraging sign that a protracted stock market decline might have been warded off, at least temporarily - did little to alleviate the fact that a lot of big money is leaving the market in a hurry, possibly as a result of fears eminating from Europe over a debt crisis, or even just because the big boys like to pull their money out of the market to enjoy some summer European holidays.
Either way, now is the time to be looking for steals and deals in the market, whether those deals have been created by this and last week's respective pullbacks, or whether there are other factors that have contributed to a particular company's share price decline that have positioned it for a potential rebound.
Sometimes a company can also be identified as a bargain based on its potential for growth alone, whether its share price took a hit in a market slip or not.
Teletouch Communications (TLLE) could be a company that encompasses all three of these trains of thought. Teletouch shares took a hit this past Friday, along with the entire market, and ended the day with a 20% on trading volume of nearly twice the daily norm. With that being said, there are encouraging signs from the company that indicate the volume boost may be a positive sign and that the company may be positioned for an all-around turnaround.
Encouragingly enough for shareholders - actual or potential - is the fact that trading volume for Teletouch over the past few months has been strongest at around the forty cent level, which is an indication that longer-termed investors may be coming in at the lower end of the stock's current trading range. Although there have been some spikes to levels significantly higher in terms of percentages over the same time period, those spikes have been followed by dips back down to the forty cent level where the buyers are buying.
With Teletouch's most recent legal battles now in the rear view mirror, the company can concentrate on returning to its growth potential. Through its subsidiaries, Teletouch is a leading U.S. wireless services, cellular, consumer electronics and public safety equipment distributor and is a leading Authorized Services Provider and billing agent of AT&T (T). Late last year the company settled litigation that had been ongoing with AT&T and, before some speed bumps were thrown in the road by Thermo Credit, provided the company and its investors with a resolution to any uncertainty surrounding the legal outcome, while also securing continued stability in the AT&T/TLLE partnership.
For a smaller company such as Teletouch, the relationship with AT&T is key, and the mutually-positive outcome of the litigation secures that relationship. As a result of the settlement, Teletouch received cash and other considerations in excess of $18.5 million and - maybe most importantly in absorbing the scope of the settlement - a mutual agreement between the two companies to forgo any future litigation.
The two parties also agreed upon a renewed 3-year distribution and 6-year dealership agreement, re-establishing the security of their continued partnership in the robust wireless services market.
Although the good news regarding AT&T had a positive impact the share price at the time, and also sparked a solid round of new investor interest. However, one more obstacle was placed in front of the company by with Thermo Credit earlier this year, when a revolving credit agreement came to an end relating to trouble that Thermo had with its own creditors, unrelated to its relationship with Teletouch.
The sudden crunch put TLLE in a cash-conservation mode that effected some of its businesses, but also allowed it to concentrate on other key areas of its business, such as distribution for its wholesale businesses.
This is where Teletouch has been marking swift progress and demonstrating its potential for growth.
Just this month alone Teletouch's wholly-owned subsidiary, Progressive Concepts, Inc. dba PCI Wholesale, has landed multiple distribution agreements with key players in the industry, including Wilson Electronics, Parrot, Inc., Aerovoice, Inc., and PureGear, among others.
The flurry of new deals and partnerships and the resolution of the AT&T litigation establishes Teletouch as a potential rebound and growth play at a time when investors are looking for potential deals in a down market.
Worth watching as a new round of investor interest may be in the works.
Disclosure: No position.
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