[NEW] Cliff Note #134 Strong Market Position, Strong Capital Allocation, and Industry Consolidation [Software]
Multibagger Themes: GARP - Premium Partner - Industry Consolidation - Strong Management
Cliff Note #134 is ready and will be added to our Microcap Quality Index.
It is actually a stock I have owned for around 5 years, but not as much as I used to. I sold a bunch during its first mult-year, multibagger move of over 500%.
Over the last 3 years, the stock pulled back 36% from its highs due to changes in the way the products & services it sells are sold and priced, as dictated by its product partner. While this shook up the industry in the short-term, the situation is causing smaller competitors to shut down or be acquired. Along with the Cliff Note, we will be publishing the original article published on Geoinvesting in March 2019. This will give you some good color on the company’s strategy, industry trends, leadership position, and the multibagger inflection points.
The company is already a top-tier player, and now its competitive position is only going to get stronger.
How much will investors pay for a stock that just doubled its EPS in its last quarter, trading at a run-rate P/E of around 5x, that has a history of superior capital allocation, where its already leading competitive position just got stronger?
Like many software companies right now, the talk about AI solutions threatening their growth rates and competitive moats could be depressing the stock’s valuation. However, we are exploring if quite the opposite is true for this stock. Some very initial research indicates that it’s possible that AI may actually benefit this company by increasing their total addressable market. My next step will be to contact a colleague of mine who is a software expert.