NAME: JONATHAN MORELAND
POSITION: FOUNDER, INSIDERINSIGHTS.COM
STOCK: Callwave (Nasdaq: CALL)
PRICE: $4.75 (as of 4p.m. yesterday)
52-WK RANGE: $3.69-$12.60
MARKET CAPITALIZATION: $98.5 million

Jonathan Moreland is a stock market analyst who runs InsiderInsights.com. Callwave is a software-based telecommunications services company founded in 1998. Its applications give users a variety of tools to help manage and redirect their incoming calls and faxes. Mr. Moreland told David Dalley of The New York Sun that he thinks Callwave might just be the next big thing.

What makes Callwave so exciting?

To begin with, the company is cash flow positive – it’s actually accumulating cash. It’s also making a profit. That’s comforting for any investor.

I also like the business model because it makes sense. It’s a no-brainer for me that people would want to use this service. … Users and telephone companies don’t require any additional hardware. For these guys, it’s all about the software, and that makes them very flexible.

The stock hasn’t performed particularly well over the past year. It was up around the $12 mark 12 months ago. How do you explain the decline?

Their biggest problem is getting users to understand how the service increases their calling flexibility and how it decreases cost. The reason why the stock isn’t going through the roof is that the company is in a state of product transition. … They’re now a road warrior’s best friend. Soon, they’ll be a cell-phone person’s best friend, too. There’s huge growth potential here.

They’ve invested a lot in this product transition, spent a lot to get to where they are, and their bottom line has declined. After earning 50 cents per share, they’re now down to 20 cents per share. So when analysts look at the numbers, and look at the earnings, things don’t look so good. But you have to look deeper. This company has a very strong balance sheet, great cash flow – and you also need to look closely at what they’re actually doing with their money. They’re investing and they’re expanding.

Why now?

I believe that this stock could double within a year. It’s still in transition, but that’s the time to get in, while it’s still under everyone’s radar. And right now it’s under everyone’s radar. There was some buying by insiders earlier this year. Interestingly, none of the insiders have been selling the shares.

Another factor is the possibility of a buyout. CALL’s market cap is at about $100 million. A buyout would have to double that value, and it makes a lot of sense for a telco to acquire a company like Callwave

What are the risks?

This isn’t a high-risk play. The company has $2.99 per share in cash. The biggest risk is that some gee-whiz application gets developed that leapfrogs them. But I believe it’s very unlikely that something could come out of left field.