Profitable & Derisked US-based SaaS Nano-Cap: Low Downside With A Plausible Path To 10x
Benefitting from the mega-trend of digitization, guiding to increasing profits by 70% (without any growth in top-line!), a new product launch, a "hidden" tax shield, and a 20% "dividend yield"
In order to tease in new readers, let me keep the company name obfuscated for the time being. This highly illiquid US-based nano-cap (sub-50M market capitalization) SaaS company
was founded in the past millenium, and a founder is still on board
with ARR > Opex, i.e. reliably profitable with high gross profit margins
is soon to be net debt free
Without any growth in revenues, this would increase income by 70%
benefits from the mega-trend to digitization
has 80% gross margins on its SaaS business and low levels of churn
is not covered by analysts
has few shares out, ca 40% insider ownership, trades in low volume and consequently in a volatile fashion
launched recently a new product (AI-based, *sigh*) that has the potential to 10x the share price in the coming years - if it meets early management shared in a recent conference call; early comments about customer sign-up and recurring revenues are positive
demonstrates yet again that taking deferred revenues into account improves the CCC analysis (see my article)
can probably earn you a double-digit yield if you lend out the shares - on a derisked company (see points 2 and 3 above) - while short interest is low
embodies a what I perceive to be a compelling, i.e. highly asymmetrical risk-reward situation
Intrigued? The company is… *drumroll*
