How unloved could electronic payment solutions company Hypercom (NYSE:HYC) be? This seven-year chart shows the company has gone nowhere -- except, mostly, down. Hey, there have been plenty of long -- or at least neutral -- faces over the past seven years or so for Microsoft (NASDAQ:MSFT), too.

But, hot stock picker and Motley Fool co-founder Tom Gardner saw Hypercom as a ticket to the cashless society and recommended it in the August 2004 Motley Fool Stock Advisor newsletter. Since the newsletter's inception in April 2002, Tom's picks have soared 57.5% while the Standard & Poor's 500 only managed an 18.6% return. Hypercom, though, is down 34.4% since the recommendation.

In his Stock Advisor review of Hypercom in December, Tom noted that it was cash-rich and experienced 11% sales growth in its latest quarter. But margins were flat, the backlog was decreasing, and a dispute with the Brazilian health ministry was dragging on. He wasn't happy.

On February 4, the stock fell 18.3% when the company announced it was going to restate its results for each of the first three quarters of 2004, and that, because of a deficiency, it expected its auditors to issue an adverse opinion about internal controls. Wow.

Ah, but that is all yesterday's news.

Today, the company reported that revenue increased 25.7% over last year's fourth quarter and that net income before discontinued operations, at $4.5 million, was up 64.5%. The company was also able to recover $1.4 million from the Brazilian health ministry. That's the good news.

Gross profit margins for the quarter fell 2.6 percentage points to 39.8%. Worse, Hypercom declared "additional weakness in internal controls over financial reporting." It indicated that it expects its auditors to say nasty things about it along those lines, too. At least it's very forthright about it, nobly sticking it in the initial text of the press release (space companies typically reserve for patting themselves on the back), but does this poor company seem to be walking around with a "Kick Me" sign on its back lately?

Hypercom has made a tremendous recovery since the point-of-sales equipment industry woes of 2001. Its CEO and president (one and the same), appointed in October 2000, helped the company through those troubled times and has overseen the continued release of innovative products. The chief financial officer joined the company in April 2002. Both should have had enough time to really look at internal controls, especially since Sarbanes-Oxley has been the talk of the business world. Obviously, this was not the focus it should have been.

Hypercom, up 6% today, has an exciting product line and is priced at 25 times estimated fiscal 2005 earnings. That's cheap if this company has the equipment for a cashless society and it can rebuild its margins. But, with internal control issues, you have to question if strong management is in place.

Speculators will see an unloved stock, with a strong balance sheet, ready to rebound -- especially after the fourth quarter's surge in sales. Conservative investors will look for other cashless-society participants, like competitor NCR (NYSE:NCR).

Are you ready to unload your unloved stocks and look for a proven winner like Tom Gardner and the Motley Fool Stock Advisor newsletter? Click here for more information.

Fool contributor W.D. Crotty does not own stock in the any of the companies mentioned and is cashless -- as in owning an empty wallet. W.D. is available for adoption by a wealthy family. Click here to see The Motley Fool's disclosure policy .