Last Friday, the stock of Route1 Inc. (CVE:ROI), (PINK:ROIUF) put a stop to its recent fall on the Canadian market and made a huge jump upwards. Boosted by the release of a new company contract, the shares went with no hesitation past the $0.2 level, coming closer to their 52-week high.
Logo_2.jpgThe turnover spiked too – more than 5.25M shares changed hands, which surpassed almost nine times the average. This was also a five-month high for the volume and a trading record for 2011. At the same time, ROI flew 37.5% up and ended the session at $0.22.

A new purchase agreement, announced on Friday, was responsible for the shares’ climb. Route1 was awarded a $25M contract by the United States Department of the Interior, U.S. Fish and Wildlife Service (“FWS”). The company will deliver FWS reliable removable computing devices and services with the ability to remotely access U.S. Government systems and information in a secure environment.

Route1_Inc._-Chart-_2_May_2011.jpgRoute1 provides digital security and identity management solutions to various enterprises worldwide – businesses, governments, the military. MobiNET is Route1’s patented communications and service delivery platform.

Winning a $25M contract is, without any doubt, a remarkable achievement for the company. It does not guarantee, though, that the progress of the shares will continue. We must wait to see if the positive impact of the announcement will last longer, or it will be only short-term – like the effect that most promotions have on stocks.

On one hand, some factors speak favorably for the company and the future share performance. Route1 is a desired and welcome participant in many scientific events. In March, the company’s president Mr. Tony Busseri was cordially invited to present at the RBC Capital Markets’ Growth Technology and Communications Conference in Toronto.

Another positive fact: just a short look at Route1’s partners will be enough to assure you that the company is certainly a well-recognized name in the communications sector. It is surely an advantage to work closely with established brands like Hewlett-Packard Development Company, L.P.

On the other hand, we might notice quite many weaknesses in Route1’s fundamentals. The company does not look very strong financially. The net loss of $1.76M for the past year and the working capital deficiency of $640K at the end of 2010 prove this.

Of course, now everything seems much better after Route1 has won a $25M worth of a contract as mentioned above.