Fundamental Research Corp.

Fundamental Research Corp.
Stockgroup Information Systems Inc.
OTC Bulletin Board : SWEB

Stockgroup Information Systems Inc.

August 24, 2005 09:30 ET

Fundamental Research Corp. Initiates Coverage on Stockgroup

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 24, 2005) - Fundamental Research Corp. has made available a report by FRC analyst Brian Tang, BBA, CFA, dated August 17, 2005, initiating coverage of Stockgroup Information Systems Inc. (TSX VENTURE:SWB)(OTCBB:SWEB). The full 22-page report including important disclosures is available for a limited time at

In the report, the analyst commented that, "We expect long-term product licensing revenues to remain stable with growth driven by advertising revenues. Advertising services grew 69% in FY04, well above the industry average of 27%."

The shares are rated "BUY" with a fair value of C$1.00. The analyst attributes his valuation of Stockgroup to several factors, including:

- Expanding 'network effects' present high barriers to entry.

- SWEB has posted an impressive 10 consecutive quarters of revenue growth.

- Stockgroup is operating slightly past its break-even point, and economies of scale should allow additional revenues to directly impact the bottom line.

- Stockgroup has a strong balance sheet, no debt and healthy cash reserves.

- The US $600 million market for Stockgroup's products is witnessing a major change, driven by an increasing number of corporations trying to provide better financial information to retain existing customers and win new ones.

"We believe the economies of scale the company enjoys, and the fact that it is currently operating at breakeven are not currently reflected in the stock price," says the analyst. Risks include sensitivity to financial markets affecting demand for financial content and potential imitation from larger players.

About Fundamental Research Corp.:

Fundamental Research Corp. is an independent equity research firm providing subscribers with the highest quality fundamental research on smaller cap companies from a value-based perspective. The analyst and Fundamental Research Corp. "FRC" do not own any shares of SWB, does not make a market or offer shares for sale of SWB, and does not have any investment banking business with SWB. In exchange for two years of research coverage, SWB has agreed to provide FRC with services such as access to distribution channels. FRC's standard fee for coverage is $25,000 per year. FRC sets fees in advance and utilizes analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. To further ensure control over our ratings, SWEB has agreed to a minimum coverage term including an initial report and seven updates. Coverage cannot be unilaterally terminated.

Contact Information

  • The Howard Group
    David Gordon/Grant Howard
    Investor Relations
    Fundamental Research Corp.
    Brian Tang, CFA
    (604) 682-7010