Update to Cliff Note #31 (CVE:BRM): Recurring Revenue Of This Clean-Tech Emissions Control Co Becomes More Tangible
Multibagger Themes: Adding Recurring Revenues - Strong Backlog - Operating Leverage - International Expansion - New Growth Markets - Competent Management
Multibagger Themes: Adding Recurring Revenues - Strong Backlog - Operating Leverage - International Expansion - New Growth Markets - Competent Management
It’s time for another update on a stock already in our Microcap Quality Index Platform, which currently covers 126 stocks (we add one to three stocks to the index per month).
You don’t have to be a trend investor to invest in trends, you just need to be aware of them. Sometimes trend opportunities just come along during the normal course of research or inside companies you’ve followed for years.
For example, we weren’t specifically analyzing the data center industry to find TGEN 0.00%↑ , TSSI 0.00%↑, OCC 0.00%↑, PPIH 0.00%↑, RFIL 0.00%↑, and $HMDPF, eventually adding them to our Microcap Quality Index. We were looking at these stocks for other reasons and just noticed the potential data center theme during our research.
However, all of them turned into MultiBaggers, with high returns ranging from 91.58% (RFIL) to 6,288.00% (TSSI), partly because of their ties to the data center industry.
By the way, I just want to be clear that we don’t necessarily like data center operators… we like the companies that offer services to data centers and help build them.
It’s hard to deny that trend investing has been working beautifully. Part of the reason for this is that investors are just more short-term than they used to be, and that’s not going to change.
So, trend investing can become a very powerful strategy to add to your investing bucket list, especially if it emerges within a long-term stock set-up you already like.
That’s why we are paying closer attention to trends as we continue to add more stocks to our Microcap Quality Index over the next few years.
By the way, if you do like trend investing, you should check out these two Substacks:
So, what’s another trend that we like right now? We really like environmental solution companies, especially when they begin incorporating recurring revenue streams in order to smooth out quarterly revenue lumpiness resulting from unpredictable project-type revenue that’s common in these types of businesses. Not only does recurring revenue make for a better business model, but it can lead to a large upward revision in a stock’s valuation multiple.
That’s why we’re getting more excited about $BRM.V ($BIRMF), an environmental services stock we originally added to our Microcap Quality Index on September 3, 2022.
So far, the stock is up 216.67% since we added it to our Microcap Quality Index, reaching a high return of 291.67%. The stock has pulled back over to last year or so due to a few subpar quarters, but it’s starting to recover. The lumpiness in quarterly revenues and backlog are risk factors we originally pointed out.
The stock is still only trading at a price to earnings multiple of less than 10x, making it a perfect candidate for one of those upward revision valuation multiples set-ups if growth becomes more consistent.
A few things are occurring that can make the stock timely again and are probably part of the reason the stock is quietly starting to inch towards its previous highs:
Record backlog.
Recurring revenue model starting to become tangible.
New opportunities servicing in the Middle East, where there’s a huge amount of modernization projects going on. The peace agreement reached between Israel and the Palestinians could also lead to a long-term opportunity once the rebuilding process begins.
Here’s what we found… and why the stock may be setting up for another meaningful leg higher over the next 18-24 months.