Good work on validating that the story that got you into a stock isn't holding up, admitting it and getting out. Respect.
Since you have cash burning a hole in your pocket, you might want to consider my personal top pick right now, DavidsTea.
- epic turn around story, not yet fully recognized by the market (NASDAQ listing in 2015 at US$19/share; pandemic cut down of 240 locations to 18, dramatic re-basing of business at a much lower level)
- scale back and rebasing now done, DavidsTea is back to growing again
- already a ten bagger off its summer lows, another ten bagger from present levels very possible
- 15% revenue growth at existing footprint
- no debt, clean cap table
- cash flow positive; would have shown IFRS profit in Q3 but chose to non-IFRS their way into a loss because they wanted to give the finger to their fired IT-vendor (how often does management do that!?!)
- they don't need to do investor relations as the business is giving them the cash they need, so they don't do investor relations
- based on last year's Q4 and financial base set in Q2 and Q3, I expect EPS of ~$0.27/share in Q4, then EPS ~$0.07 in each of Q2, 3 and 4.
- FY25 EPS at ~$0.48, yet stock is ~$1.15 now (forward PE 2.5!!!)
- $8M cash pre-4Q Christmas rush, likely ~$15M+ as of now
- added two stores just prior to Q4 rush, 18 to 20 stores, the extra stores will show up in Q4 revenue
- management plans to go to 40 stores 'by 2027', funded from free cash flow
- likely now generating more cash flow than needed to expand at that rate, so dividend or buy-back (I think buy back as management already owns 44.8% of stock)
- 4Q (Nov-Jan) reports in late April/early March, at which point a version of this would show out as true and the stock should do a quick multi-bagger off current levels. Little room for downside as the price is already crazy low given what should have shown as earnings per share of ~$0.05 in traditionally the worst quarter of their cycle .
Their Q3 MD&A is hilarious. They must have had fun writing that and caring not one bit who read it. They took a $3.1M hit to Q3 ($0.117/share when they non-IFRS'd their way to a $0.06/share loss) that they had to reverse out in the non-IFRS to IFRS reconciliation because, technically they shouldn't have taken the hit. But they took the hit to more thoroughly trash talk their IT vendor.
Solid write up. Since my position was already small (<1% especially after today) I’m going to take the wait and see approach before getting fully out or adding. Will like to see how new sales team does after proper training I remember seeing 12-18 months to fully train. So still 6-12 months out. Also curious to see UK facility. If CEO pushes that out further than red flag and will sell. They are also working on the new app for upsell. I see limited upside but could lead to the sales team hitting the ground running quicker.
Good work on validating that the story that got you into a stock isn't holding up, admitting it and getting out. Respect.
Since you have cash burning a hole in your pocket, you might want to consider my personal top pick right now, DavidsTea.
- epic turn around story, not yet fully recognized by the market (NASDAQ listing in 2015 at US$19/share; pandemic cut down of 240 locations to 18, dramatic re-basing of business at a much lower level)
- scale back and rebasing now done, DavidsTea is back to growing again
- already a ten bagger off its summer lows, another ten bagger from present levels very possible
- 15% revenue growth at existing footprint
- no debt, clean cap table
- cash flow positive; would have shown IFRS profit in Q3 but chose to non-IFRS their way into a loss because they wanted to give the finger to their fired IT-vendor (how often does management do that!?!)
- they don't need to do investor relations as the business is giving them the cash they need, so they don't do investor relations
- based on last year's Q4 and financial base set in Q2 and Q3, I expect EPS of ~$0.27/share in Q4, then EPS ~$0.07 in each of Q2, 3 and 4.
- FY25 EPS at ~$0.48, yet stock is ~$1.15 now (forward PE 2.5!!!)
- $8M cash pre-4Q Christmas rush, likely ~$15M+ as of now
- added two stores just prior to Q4 rush, 18 to 20 stores, the extra stores will show up in Q4 revenue
- management plans to go to 40 stores 'by 2027', funded from free cash flow
- likely now generating more cash flow than needed to expand at that rate, so dividend or buy-back (I think buy back as management already owns 44.8% of stock)
- 4Q (Nov-Jan) reports in late April/early March, at which point a version of this would show out as true and the stock should do a quick multi-bagger off current levels. Little room for downside as the price is already crazy low given what should have shown as earnings per share of ~$0.05 in traditionally the worst quarter of their cycle .
Looked recently and was rather meh about it. Did not know about this IT vendor thing though impacting results. I'll give it another glance.
Their Q3 MD&A is hilarious. They must have had fun writing that and caring not one bit who read it. They took a $3.1M hit to Q3 ($0.117/share when they non-IFRS'd their way to a $0.06/share loss) that they had to reverse out in the non-IFRS to IFRS reconciliation because, technically they shouldn't have taken the hit. But they took the hit to more thoroughly trash talk their IT vendor.
It’s almost admirable. 😂
nice job wolf...thanks
Solid write up. Since my position was already small (<1% especially after today) I’m going to take the wait and see approach before getting fully out or adding. Will like to see how new sales team does after proper training I remember seeing 12-18 months to fully train. So still 6-12 months out. Also curious to see UK facility. If CEO pushes that out further than red flag and will sell. They are also working on the new app for upsell. I see limited upside but could lead to the sales team hitting the ground running quicker.
Feels like my sentiment from 3 months ago.