May 27, 2004
SpeculatingStocks.com Stock Pick: Applied Digital Solutions, Inc. (ADSX)
Stock Price: $2.18 (long-term strong buy)
Applied Digital Solutions, Inc. is an advanced technology development company involved in radio frequency identification (RFID), systems integration, and telecommunications. Their main focus is RFID through ADSX and their majority owned company Digital Angel Corp (DOC).
In the November 2003 issue of Business 2.0 there was a list of the top 10 technologies to watch in 2004. RFID was listed as the #2 technology to watch in 2004. Wal-Mart is requiring all of its suppliers to use RFID tags.
The uses for RFID extend beyond the supply chain. ADSX owns a device known as VeriChip, which is inserted under a person’s skin. It can be used to hold security, financial and emergency identification information. The VeriChip is going to be read by a proprietary “smart gun” being developed by ADSX. Digital Angel Corp has developed similar technology for use in tracking meat products. ADSX & DOC both ran up huge during the mad cow scare.
ADSX has accomplished their 2003 goals of debt elimination, balance sheet strengthening and building of a ‘foundation’. Q1 2004 EPS was greatly improved, $0.03 per share compared to Q1 2003 earnings per share of ($0.95). The company currently has $14 million in cash on hand.
ADSX shares are not lacking insider or outsider confidence. ADSX recently sold 2 million shares of its common stock to an institutional investor at a price of $2.76 per share. Also, the CEO of ADSX purchased 25,000 shares in the open market at $3.00 per share.
Currently there are just over 52 million shares outstanding.
ADSX has declined undeservingly since the reverse split that occurred over a month ago. We believe this is a good point to buy shares of ADSX.
SpeculatingStocks.com Target Price: By the end of 2004, we expect ADSX to surpass $5.00 a share.