find me a better stock to trade, page-12

a very safe medium term investment TOX and to a greater extent TOXO presents excellent opportunity in the medium term.

The fair value or I should say a very very conservative value of TOX solely based on the June quarter cash flow and no growth is $800,000 x 4 = $3.2million

$3.2million / 500 million shares fully dilued is 0.0064c per share.

0.0064 x p/e ratio of 10 is 0.064c per share.

I would say this would be a fair share price if TOX were experiencing the same cashflow it did in the last quarter just like in every quarter proceeding it.

This however does not take into consideration the fact that TOX is in the midst of a substantial growth phase. THis company had a cash overdraft back in October 2004, couldnt sustain a single month of postive operating cash flow and really had their backs to the walls.

A fair P/E ratio taking into account that the company's operating cash flow is more favourable every month.

The positive operating cash flow for June was $466k, which is more than half of the operating cash flow for the June quarter.

I personally believe TOX should be valued as follows to take into consideration future growth of the company:

Cash flow for the June quarter: $466k

$466k x 12= $5.59million

$5.59/500 mil shares = 0.011 e.p.s

0.011 x p/e ratio of 15 = 0.167c per share.

I think a P/E ratio of 15 is fair. TOX is a small cap company undergoing a significant transformation in their operating position. If a small cap company such as TOX cannot warrant a p/e ratio of around 15 to allow for an increase in potential future earnings, no small cap should be trading at a p/e ratio of 10 or more.

16c may sound a bit overboard but I think the share price will be at least 10c come expiry date of the option and TOX will be trading around 16c in a year's time. THerefore the oppies will be at around 7c I think come Jan 06. This is why TOXO is excellent value now at 1.7c.

Very easy money to be made here.

Best of luck to all.

Cheers