The first automated teller machine was installed at a New York City bank in 1939. It was removed just a few months later, because customers just weren’t using it.

That’s certainly not the case today. In fact, it’s difficult for the average person to imagine life without 24-hour access to his bank account. More than half of American adults use ATMs an average of eight times per month. That’s millions of transactions every single month…

Cash machines are also big business. Technology, installation and maintenance are all a part of the game. We’ve found one penny stock that’s posting consistent profits with its ATM business. It’s been so successful recently that it’s now preparing to expand its business into other types of self-serve kiosks.

In addition to its stellar fundamentals, if this stock continues its hot streak, you could very well see triple-digit gains in as little as eight-12 weeks…

I’ll tell you how to get the name in just a minute, but first, let me show you just how much potential this stock has for your small-cap portfolio…

Plenty of Positive Momentum in the Cash Business

The company I’m talking about is a bulletin board company in the ATM business. The company owns and operates around 4,300 ATMs and other self-service kiosks across the country.

It’s stock is so small that it’s not on most investors’ radars at all. But even though its market capitalization is less than $20 million, it is beginning to attract some attention. The Jacksonville, Fla.-based company’s local business paper is even catching on to the company’s consistently stellar performance…

“Earnings have nine quarters of positive momentum, and in the last quarter were up nearly 24%, to $557,000, with less debt and more cash,” according to the Jacksonville Business Journal. “Management thinks the company is finally in good shape.”

We think so too. All it takes is one look at this stock’s fundamentals. The consistent profits are impressive for such a small company. As is its steadily growing cash position. The company has also nearly doubled its net profit margin in only one year. On top of these numbers, this ATM operator is trading at a low multiple considering its growth potential, only 0.8 times sales.

While we don’t expect any big increases in the cash machine business as a whole, it’s stable and lucrative…and that’s all we need it to be.

Despite the maturity and relative stability of the ATM industry, our stock continues to add to its ATM customer base, and the company has additional plans to grow the company and shareholder value that we’ll reveal in just a minute…

In fact, just last week, they signed a three-year contract to place ATMs in 51 stores in a national grocery store franchise. The company values the contract at more than $750,000 per year.

This new deal should easily make up for the 8% decrease in revenue it posted in Q2 due to the loss of an account.

The Ground Floor: A New Generation of Automated Service Machines

We are entering an ideal time frame in which to purchase shares of this exciting stock. Its far-reaching ATM business is the company’s backbone, providing strong revenue and cash flow to support expansion.

Then there’s this secondary growth opportunity…

Right now, this company is in the midst of a multiyear effort to ramp up profits from its core business and expand into other self-service niches. Following in the footsteps of Redbox, the Coinstar-owned DVD rental booths, this company has begun a DVD rental kiosk pilot program on its home turf in Jacksonville, Fla.

We like this foray into the kiosk rental market. It’s a niche that has the ability to perform very well during almost any economic climate. DVD sales are down double-digits this year as consumers continue to tighten spending habits. But rental revenue is up more than 8% across the industry. Spending $1 a night on a DVD rental from a kiosk is an easy choice compared with what a consumer would spend buying or going to a theater.

Expect to see more positive news about this DVD kiosk pilot program in the near future. The company has already announced it has expanded the program from nine to 24 locations. Management has also been touting an aggressive ad campaign set to begin soon…

“Management continues to invest in our sales and marketing capabilities with the goal of expanding our network,” this group’s CEO told the Business Journal. “Simultaneously, we are focused on adding additional services to accelerate our growth. We continue to focus on leveraging our ability to deploy, manage, maintain and process transactions from a wider range of self-service kiosks beyond the traditional ATM.”

This Rally Is Ready to Continue…

And this stock’s chart looks attractive right now, as well. Shares have been unstoppable since the beginning of 2009 — and their price has rocketed an amazing 513.8% since January.

But that doesn’t mean that this rally is over…

Right now, the stock is in a sustained uptrend — a sign to technical analysts that there’s still plenty of room for growth despite the impressive numbers the stock has returned.

Despite the colossal run-up the stock has already given its investors this year, the company’s chart indicates that things are still full steam ahead. And the company’s fundamentals back that up in a big way…

I released the name of this stock to my Bulletin Board Elite readers last Friday. Since then, the stock has already put 14% in their pockets, and like I said before, I expect it to do much better than that.

If you want to get this name – and the rest of my under-the-radar stock portfolio – just click here to get the full details from Bulletin Board Elite.

Best,
Greg Guenthner

September 4, 2009

Greg Guenthner

Greg Guenthner heads up Agora Financial’s small-cap division and is the founder of one of the only independent OTC research advisories in the industry. A graduate of George Mason University, Guenthner joined Agora in 2005 after several years as a journalist. He is managing editor of Penny Stock Fortunes and Bulletin Board Elite.

View articles by Greg Guenthner