STG Group Inc (OTCMKTS:STGG) Is A Top Penny Stock

Today, we need to talk about STG Group Inc (OTCMKTS:STGG), the provider of cyber, software and intelligence solutions for the US Government and major corporations.What's happening?The company has recently announced that new members have been elected to the Board of Directors. In our opinion, the fact that some of them seem to have a lot of financial expertise made the market participants react. Company Logo - STG Group Inc OTCMKTS:STGGThe stock returns have been extraordinary. From trading below $0.5, the share price increased in a very short period of time to touch the level of $3.00. Most importantly, market interest in the stock seems to be increasing and the volume spiked up too. More than one million shares changed hands some days. 2 months chart for STGGIn this article, we will provide you more details about the new information and assess the STG Group's business model.BusinessSTGG seems to be an experienced player in the industry. It has been working for the US government and large companies for more than 30 years.The company is said to have an "operational strength and track record" in securing "highly sensitive national security networks," and solving technological problems in mission-critical contexts.The most significant in our opinion are the customers accumulated.Some of the company clients are very big institutions, like the Department of Defense, the Intelligence Community, the Department of Homeland Security, the Department of State, and other federal departments and agencies with national security responsibilities.Having serious and large clients shows that the company knows very well its business and owns know-how, which interests big players.Our business rationale is as follows.If the US Government is trusting this company for its intelligence systems, we believe that individuals will trust the management and the business of STGG as well.Recent DevelopmentsOn December 7, 2017, the company released that it had appointed new Board of Directors to take control of STG Inc., its subsidiary operating company.The following members will lead the company from now on:

• Phil Lacombe, President and CEO of STG
• Robert Warshauer, a managing director from Imperial Capital
• Jarlath Johnston, managing director at Bentley Associates L.P.

Robert Warshauer said the most interesting and meaningful words. Read the following:

"We want to be very clear that our role is to assure the success of STG. And that means maximizing value for all of STG’s stakeholders. Our duty is to all of STG – to STG’s important government customers – to the men and women of STG who make the company successful – and to STG’s many stakeholders." Source

What's our take?According to our experience, when financial experts join the Board of Directors of a company, shareholders are the ones that benefit the most.Why?Financial people understand very well how to please shareholders. They know very well what they want and how to pay it.But, that's not all.These people are also skilled in negotiating with debt holders, which will help the company in the near future.Regarding this matter, now read what Phil Lacombe, President and CEO of STG, said:

"Our relationship with our creditors is increasingly positive, and the company’s recent win of the GSA Alliant II contract -- a potential 10-year $50 billion indefinite delivery/indefinite quantity vehicle -- reinforces our view." Source

As a result, we believe that being a shareholder of STG right now is an interesting opportunity.Financial SituationWe appreciate the company's financial situation. We believe that the company is being undervalued by the market. Check the following stats:

• Revenue per share: $9.26
• Book Value per share: $1.21
• Share price: $1.63

The company is trading very close to its book value per share, which clearly shows how undervalued it is. Additionally, the company is making more than seven times its share price in revenues, which is also quite surprising.On top of it, we appreciate that there are a few short sellers; 0.06% of the total outstanding shares. It shows that a few individuals seem to believe that the company is overvalued.Finally, the fact that insiders own 85.63% of the total outstanding shares is also quite positive.ConclusionCurrently trading with a market cap of $26 million, STGG is an exciting story among small caps. We believe that the announcement of the new Board of Directors made market participants react, but there is more.In our opinion, the float is very reduced, which increases share price volatility when large market orders arrive to the exchange. This is what happened this week.We need to note this feature, as limited float creates many opportunities for the individuals focused on volatility plays on the OTC Markets.To sum up, there is a lot to like on this company, thus we encourage readers to follow new developments!We will be updating our subscribers as soon as we know more. For the latest updates on STGG, sign up below!Disclosure: We have no position in STGG and have not been compensated for this article.Image courtesy of Chuck Allen via Flickr