Apr 29, 2023·edited Apr 29, 2023Liked by Nick Maxwell 🧙♂️
Just finished reading; quality write up! Thanks for sharing. When I first started looking at them 4 years ago, they were priced for growth, and now with $68M in assets on the balance sheet, a market cap of $100M, and producing ~$10M in profits, they are eventually going to become a deep value play.
I heard the Blair Sergeant comment on order numbers numerous times in the past; short summary is; it's always going to be lumpy. A B2B customer can put in a massive order, and then nothing for a few years. So yeah, will see...
On the lower P/E, I think the recent drama you mention with GreenMo and the overall hesitation for small caps is keeping this one in obscurity for now. If growth continues, I suspect this will change eventually.
I would say the one bit of analysis you're missing is around capital allocation. I think that's a big hesitation in the market right now. They have a third of their entire market cap in cash with no debt but haven't really maid any major capital allocation decisions (besides a few small acquisitions). What they decide to do with that cash is going to have a huge impact on the stock price. They've seemingly only been earing around 1.5% interest on the cash as well. I feel like a major CA decision would see a big reaction from the market. Though I also worry that they're being way overly conservative.
Thanks for the feedback Myles and for reading, appreciate it! It’s a really good point, if you had your way is there something you would want them to invest in?
I'm not really sure. Acquisitions are obviously scary and they shouldn't push for one for the sake of it. If they don't have anything better a small shareholder distribution like a dividend or a repurchase I think makes sense. Maybe like a $5m buyback? That's why I'm not in charge haha. Reinvesting in the business to take advantage of the market opportunity?
My initial thought after your comment was a buyback which could offset part of the dilution but you’re right it’s a really tough decision with lasting impacts. Hopefully some reinvestment back into the product, longer charge times etc. I guess we’ll wait and see!
Just finished reading; quality write up! Thanks for sharing. When I first started looking at them 4 years ago, they were priced for growth, and now with $68M in assets on the balance sheet, a market cap of $100M, and producing ~$10M in profits, they are eventually going to become a deep value play.
I heard the Blair Sergeant comment on order numbers numerous times in the past; short summary is; it's always going to be lumpy. A B2B customer can put in a massive order, and then nothing for a few years. So yeah, will see...
On the lower P/E, I think the recent drama you mention with GreenMo and the overall hesitation for small caps is keeping this one in obscurity for now. If growth continues, I suspect this will change eventually.
Well done once again mate.
Thank you mate, again, appreciate you taking the time to read and comment!
Great call on the orders, that makes plenty of sense and probably makes the growth in orders more impressive.
I would say the one bit of analysis you're missing is around capital allocation. I think that's a big hesitation in the market right now. They have a third of their entire market cap in cash with no debt but haven't really maid any major capital allocation decisions (besides a few small acquisitions). What they decide to do with that cash is going to have a huge impact on the stock price. They've seemingly only been earing around 1.5% interest on the cash as well. I feel like a major CA decision would see a big reaction from the market. Though I also worry that they're being way overly conservative.
Thanks for the feedback Myles and for reading, appreciate it! It’s a really good point, if you had your way is there something you would want them to invest in?
I'm not really sure. Acquisitions are obviously scary and they shouldn't push for one for the sake of it. If they don't have anything better a small shareholder distribution like a dividend or a repurchase I think makes sense. Maybe like a $5m buyback? That's why I'm not in charge haha. Reinvesting in the business to take advantage of the market opportunity?
My initial thought after your comment was a buyback which could offset part of the dilution but you’re right it’s a really tough decision with lasting impacts. Hopefully some reinvestment back into the product, longer charge times etc. I guess we’ll wait and see!