Nano-Cap Under Real Estate Liquidation Value with Potential for 5x Revenue Growth

Some of the best stock ideas are in the nano-cap space. Stocks so small that institutional investors simply cannot purchase the equity. It is a game of numbers. And if your portfolio is small enough you can take advantage of these mispriced opportunities.

That is the kind of situation that I am writing up today.

The company is a tiny little nano-cap. The market cap is a sheer $5.3 million and with $3.5 million of net debt, we have an enterprise value of just $8.4 million.

Here is where things get interesting.

The company is in the final stages of constructing at 100k SF facility on 15.3 acres of land. The facility has been appraised at $13 million and the 10 excess acres are valued at $3.7 million.

The CEO, who has been buying stock in the open market, has publicly stated when this facility comes online at the end of Q1, that they will 5x their production capacity.

Even better, a major competitor just left the business and all of their customers are displaced. Fifty new customers will need a new supplier and this company will be ready and able to win new business.

The company is currently profitable and they don’t need this new facility to come online to continue to generate cash flow.

But when the facility comes online, which should be anytime now, there is a good chance of revenues more than doubling, which should drop right to the bottom line.