A Cheap Stock at 2.5x EBITDA and Growing 90%
Company trading at 2.5x EBITDA, revenues up 90% and under liquidation value
Sometimes when you are researching stocks you see opportunities that are such no brainers it only takes five minutes of research to know the stock is a buy.
That is like the idea I am writing about today.
Here is the pitch:
EV/EBITDA is 2.6x
Revenues in Q2 are up 88% and 55% in Q1.
The stock collapsed from a weak 2024 and will likely re-rate as Wall Street is asleep at the wheel.
Inventory is up substantially which suggests that there is strong demand for the company’s product and revenues will continue to grow.
Working capital will eventually get converted into cash which could be worth 35% of the enterprise value.
Owned land and buildings are worth more than the enterprise value giving us a substantial margin of safety.
This is an easy one.
The company is dirt cheap.
Revenues are growing substantially.
The owned land and buildings are worth the entire enterprise value.
And then you get a ton of working capital and equipment on top of that.
In addition the company is trading at 0.5x tangible book value.
Any value investor who looks at this name will know instantly that it is cheap, there is upside and if you are wrong on your assumptions, you probably won’t lose much money just given the absolute low valuation.
Let’s dig in.