A Hidden Growth Stock

Left-for-dead valuation + leverage + growth = explosive upside potential

This stock is deep under the radar (zero chatter online that I can find) and is growing revenue steadily. In my view the business is ludicrously undervalued on an enterprise value basis.

And this is understandable. It screens horribly on trailing numbers and has a few of the typical “micro-cap” issues that keep stocks under the radar.

However, it is not tiny. The market cap is over $250 million, revenue is substantial, and 2023 operating income was over $75 million.

I believe the underlying business is capable of a vastly higher public market valuation. The “bad optics” should clear up over the next 12-18 months.

What really gets my attention is the call-option like upside potential. With the common equity around 20% of enterprise value, there is a reasonable bull case for +500% return potential over a multi-year holding period.

As with any levered micro-cap, risk is also elevated. My approach is to view 100% of the position as at risk and to take a prudent initial position size.