There is a definitive point in the life of a public company when it officially earns its stripes as a strong contender in the small cap market. That day is today for Union Dental Holdings Inc. (OTCBB: UDHI) because this is the day they announced to their shareholders - and the market at large - that they are officially profitable.

Savvy investors know that "being profitable" is often just a matter of managing debt. Even established companies (such as. . . say the majority of the airline industry!) are not profitable. But for public companies trudging through the murky waters of small cap infancy, being profitable is one of the best indicators to investors that management is on track for the bigger picture.

What A Difference a Year Makes

Management announced in today's press release that third quarter earnings are in and UDHI has a whopping profit of nearly $39K! Now while this is probably not enough to buy a mobile home in Tornado Alley, it IS a vast improvement over the loss of $680,477 logged during Q3 '06. In addition, revenues are up nearly 22% for the first nine months of the year in comparison to 2006. Even if the company had a profit of $1.00, we would still be optimistic because being profitable means they have worked to ground zero - which is no easy feat for most small caps.

Unfortunately, UDHI's thriving bottom line has not had a great deal of affect on it's stock price. Many of you have likely ducked for cover as the company's shares have depreciated over the past 12 months. But hopefully this news is just what investors need to see to put their money back on the table. UDHI has, now more than ever, the makings of a successful company and consequently a successful investment - even if the market disagrees right now.

If Union Dental is new to your playlist, here are the cliffnotes on it. UDHI has been making dental coverage more affordable for America's labor work force which now totals more than 15 million members. Currently boasting a network of more than 1,800 dental practitioners across the U.S. and a customer base possessing nearly $200,000,000 in annual purchasing power, UDHI's labor union clientele is highlighted by such sizable organizations as:

- Communications Workers of America (CWA) - (700,000 members);
- International Brotherhood of Electrical Workers - (IBEW) - (750,000 members);
- United Association of Plumbers and Pipe Fitters (UA) - (300,000 members); and
- Association of Flight Attendants - Communications Workers of America (AFA-CWA) - (55,000 members).

A Business Model For Growth

UDHI's strategy of charging affiliated dentists an annual management fee of up to $6,000 per office for the rights to "areas of exclusivity" (based on patient population density) has proven to be quite effective. If the company can generate just $3,000 per provider, its current base of 1,800 would generate $5.4 million in revenues during 2008. For those that are counting, that equates to nearly 64% more than revenues logged thus far during 2007.

With approximately 200,000 practicing dentists and 15.4 million union workers in the United States, many with multiple dependents, UDHI is blessed with a seemingly never ending supply of potential customers and knows exactly how to bring them in. This is very positive for the future as the company looks to further grow its network.

Penny stocks are largely traded for their range of movement. The chance of a $100 dollar stock doubling in a week is pretty rare. But a penny stock doubling in a week is not only possible - it is common. So as UDHI is growing fundamentally on the inside, it is incredibly possible that it will reward investors exponentially on the outside. After all, it only has to go up a penny to give investors 100% return.

Labels: UDHI, UDHI.ob, Union Dental Holdings, Union Dental Holdings Inc.