Hello Fellow Stock GumShoe Readers,
It’s an honor to be able to share with you an investment idea that I strongly believe in and hopefully it’ll accomplish two things: Give you a chance to participate in a huge opportunity and help me win an annual subscription too.
To start with I would describe my idea as “unknown, undiscovered, and undervalued”. That sets the stage for what I believe is “unlimited” potential. So you’re hearing about this company in the early phase of its growth. But make no mistake about my conviction, now is the time to be buying or building a position in this company.
Our David is a uniquely positioned SaaS company in the Internet of Things (IoT) sector leveraging patented technology related to the management and optimization of energy assets, such as HVAC units, wind turbines and oil & gas assets. Our David is well aligned with global energy trends that are driving businesses to adopt technology to lower electricity costs, extend the life of energy equipment, maximize energy production and increase the intelligence of legacy energy systems. With competitive data and analytics edge, coupled with management’s energy experience, should help it add clients to an already impressive base, with pricing power and new asset connections leading to outsized revenue growth versus other SaaS peers.
Strong Competitive Position / Proven Technology: Our David has a solution called “AssetCare”. Leveraging data from low-cost IoT sensors, AssetCare is used by the likes of Bank America, Starbucks, and McDonald’s to help curb energy usage, targeting millions of smaller and older buildings where cost of implementing complex automation systems isn’t feasible. The company also leverages AI/3D imaging technology that is so precise it has been used by Lockheed Martin to assess damage in F-35 jets. Now it’s being used to correlate wind turbine blade damage to energy production. There are multiple opportunities for growth in a global context as the demand for energy increases, electricity rates rise, and more businesses and countries embrace renewable
Strong SaaS Model / High Growth with High Margins: Our David is a rapidly growing company, with organic SaaS revenue of just under $1 million in 2018 forecast to reach $5 million in 2019 and $11.5 million in 2020, with recent acquisition that brings in $35 million in consulting revenue in oil & gas sector. All in, total revenues go from $1.8 million in 2018 to $31.8 million in 2019
and $61.1 million in 2020. That should produce EBITDA of $2.4 million and $9.8 million in 2019 and 2020, respectively. (These are conservative estimates and in Canadian dollars).
As our David grows it’s AssetCare revenues, please keep in mind these have margins in the 65% – 70% range. And the market will recognize this and give our David a much higher valuation, similar to other SaaS software companies trading at 8X – 10X revenues.
Strong Management Team / Outstanding Track Record : Our David is blessed with an outstanding management team that has consistently under promised and over delivered. They delivered by ending 2018 with 28,000 connected assets. Their goal for 2019 was 40,000 connected assets, but recently had to update their progress that they will exceed that goal. The CEO spent 10 years at Honeywell where he led the internet and software businesses and was founding partner of Energy Knowledge Inc., which was acquired by Yokagawa Electric Corp., where he led deals with IE and KBS. He is joined by a co-founder who brings leadership roles at Yokagawa, Honeywell and ExxonMobil.
Our David has three business segments : Smart Facilities (Commercial Buildings, QSR, Hospitals, Malls), Smart Energy (Wind Energy and Transformers) and Smart Process (Oil & gas, Chemical, Petrochemical).
Smart Facilities currently has roughly 35,000 connected assets by leveraging the cloud with IoT devices to provide energy efficient solutions. Smart Energy
currently has 100 wind turbines connected with s goal of 1000 by year-end. They recently signed a deal with Longyuan, China’s largest wind farm operator. Global Wind Energy Council (GWEC) stated there were 341,000 wind turbines at the end of 2016. Our solution makes wind turbines smarter via AssetCare, helps to increase value, performance and lifetime of these assets. Smart Process has also gained traction by recently signing an AssetCare deal with an oil & gas operator in Alberta to connect six facilities for remote management. This potential market has 700 similar mid-stream oil & gas facilities. And when you consider global markets, the oil & gas opportunity grows to 14,000 locations.
Our David is showing all the right signs of a company destined for greatness. AssetCare is a subscription based, Artificial Intelligence (AI) powered service used to manage the health and performance of critical assets. Matt McCall recently listed eight mega-trends that can produce 10X returns and our David is in two of his eight categories : 5G and AI / IoT. Another example
of potential greatness was a quote I heard from Par Technology’s CEO Savneet Singh. He said, “he’s convinced that if Warren Buffett were 30 years old, he would be buying up or investing in SaaS software companies. Our David is a small company now, with big solutions for big customers. Said another way….. small company + big solutions + big customers = BIG Potential.
If you want to see what that kind of potential looks like, take a look at the chart of a similar company called Aspen Tech (AZPN). And our David stands very tall against them too. How will our David change the world? By creating a more efficient future by using 5G, AI / IoT, Cloud computing, and Data Analytics.
Hopefully most of you are familiar with the story of David versus Goliath. So how did David defeat Goliath? He had the right weapons, he was in the right place at the right time and he had the right battle strategy. In our David’s case, that’s the right technology, right model / space and right management team. Yes, we’re surrounded by Goliath’s such as : Honeywell, Siemens, Johnson Controls, etc. As you know once a company reaches a Goliath size, it moves slower, has layers of bureaucracy, and ultimately loses it’s competitive edge. This is our David’s path to victory.
Our David’s Identity
Our David is a company named “Universal mCloud”. You can find the stock currently trading on TSXV under symbol MCLD and OTC under MCLDF. The current price is $0.40 on TSXV and $0.31 OTC. By investing in mCloud today, you’re putting yourself in a position to be in one of the best opportunities I’ve seen in a long time. If this story makes it past the initial stage, I’ll be happy to keep you updated on mCloud’s (Our David’s) progress as mCloud grows it’s SaaS revenues, transitions to NASDAQ and is ultimately acquired by one of the Goliaths who gets tired of losing to our David / mCloud.
Thanks for you time and thanks for the opportunity!
This is a discussion topic or guest posting submitted
by a Stock Gumshoe reader. The content has not been edited
or reviewed by Stock Gumshoe, and any opinions expressed
are those of the author alone.