DivX (DIVX – Nasdaq)

Dear Bottarelli Research Member,

This week, you’ll learn about a company that’s growing faster than grass after a rain storm. In short, their patented software will soon blow the lid off how online digital movies are viewed. In one simple process, you can download their software, make your own movie, and then share them with anyone online. Some major names like Samsung, JVC, Sony, Pioneer, and Phillips Electronics have already jumped on board, which means we could soon see mouth-watering, savory profits, so let’s get right into it! Here’s Bryan with the full details.

Sincerely,

“A Company that’s Growing Faster
than Grass After a Rain Storm”

It’s something that I’ve always wanted to do: Film, edit, and create movies for my friends and family to see. But I’m not a “tech-guy” by any means, which means the movie studio packages you see at the Apple Computer store look too overwhelming and complicated. And as a result, my passion remains on the back-burner. But now, DivX could be the ones to solve this issue on a broad-based scale.

DivX offers a video compression/decompression software library (called “codec” for short) which is a set of software libraries that plug into video applications and allow users to easily create and play videos in a standard format.

Over the last four years, the DivX codec has been downloaded over 200 million times — and the momentum is growing by the day. In fact, over 60 million of these 200 million downloads have occurred over the last twelve months — which has allowed DivX to expand into other consumer software applications and license their technologies to consumer hardware device manufacturers, which creates increasing revenue generation.

In fact, DivX’s Q4 2006 profit climbed three-fold, coming in at $7.4 million ($0.21 cents per share) up from $2.2 million ($0.03 cents per share) for Q4 2005. On a full year basis, net income hit $16.4 million ($0.61 cents per share), which was up substantially from the $2.3 million (less than $0.01 per share) that they recorded in 2005. So as you can see, the company is growing at a strong pace — and we expect this to continue here in 2007. After all, the explosive popularity in video-based Web sites like YouTube.com will drive the video demand for many years going forward, and DivX offers an easy way for the broad-based population to participate in this exciting extension of entertainment media.

Best of all, hardly anyone on Wall Street is even aware of DivX simply because the shares just went public in October of 2006. As you can see, the stock quickly shot from $18.00 up to $32.00, but has since come back down to a very attractive entry level under $22.00. This means that DivX is practically back down to its IPO price — making it a great buy at current levels. Let’s pick it up now while it’s still overlooked and under-appreciated by the vast majority on Wall Street. Over 12 months, we’ll be handsomely rewarded.

PLAY: Buy shares of DivX Corporation (DIVX – NASDAQ) at or under $22.50, good for the week. To limit your risk, place a protective stop loss at $14.00.

Sincerely,