written by reader 150x Fintech Small Cap from MF? (March 13, 2021)

By thejeanjacket, March 13, 2021

Hi all, received an MF teaser today, any guesses? Looks like a Fintech small-cap from their “Fintech Fortunes” portfolio.
Email text below, but TLDR: $650M market cap; in the “security/identity verification” tech space; “made” $105M last year (net? gross?); management estimate $15.8B market opportunity; profitable—88% gross margin; trading @ 6.2x sales; not yet recommended by MF.
Going to do my own research and will post if I come up with anything, but wanted to post this now to get others’ gears turning if anyone has ideas. Happy Hunting.
(Small note: Email notes 1/50th the size of Mastercard, but this doesn’t match up with the $650M market cap—$650M is closer to 1/500th the size of Mastercard’s $380B market cap. Not sure if that’s a mistake, or if they’re referring to another metric.)
Here’s the relevant text from the email:
===================
“… I’m so excited to share a small-cap stock that the team over at Extreme Opportunities: Fintech Fortunes has just recommended.
I’ve never seen anything quite like this one before.
I believe it has a 150x potential growth opportunity — which is simply staggering.
And for me, it checks all the boxes.
— Long runway… With a tiny $650 million market cap, our experts think this stock has plenty of room to run. Heck, it’s less than 1/50th the size of Mastercard!
— 150x(!) potential growth opportunity… This stock is situated in the unique security/identity verification niche…and while it made $105 million last year, its management estimates a $15.8 billion total market opportunity. 150X potential business growth? Yes please.
— Already profitable… It’s hard to find quality small-cap stocks in the tech space these days. It’s even harder to find one that’s already profitable. But given its 88%(!) gross margins, I guess it should be no surprise.
And in my view, surprisingly cheap! We all know that the bull market has caused tech valuations to stretch sky-high. That’s why I was surprised to see this company only trading at 6.2x sales. To compare, Fool favorites Twilio and MongoDB both trade for around 35x sales.
Also, this stock hasn’t been recommended anywhere else at The Motley Fool. It’s currently 100% exclusive to the Fintech Fortunes portfolio.

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.

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Mark
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Mark
March 13, 2021 2:11 pm

I’m pretty sure it’s MITK althought I don’t think they’re truly fintech. Meets all the criteria.

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tshelley72
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tshelley72
March 13, 2021 2:29 pm

I was thinking Payoneer. which will be introduced through a SPAC under symbol FTOC, but I don’t think the acquisition has happened yet.

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kapphx
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kapphx
March 13, 2021 3:13 pm
Reply to  tshelley72

MITK?

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ELR
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ELR
March 13, 2021 4:09 pm
Reply to  kapphx

I also think MITK

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simomoney
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simomoney
March 13, 2021 3:12 pm

Sure sounds like MITK

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smuzz89
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smuzz89
March 13, 2021 3:13 pm

Did some searching and came up with Mitek Systems (MITK). Checks most of the boxes (market cap and gross margin pretty much on the nose), but I’m honestly not sure how to figure the “trading at 6.2x sales” bit, so if anyone could tell me how that works for the future, that’d be great.

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blpenn
Irregular
blpenn
March 13, 2021 9:53 pm
Reply to  smuzz89

Price to Sales ratio (trading at X sales) is calculated by the current share price/(sum of last 12 month net sales/number of outstanding shares)
$15.30/(101 Million for their FY20 report/42,687,000 outstanding shares)
Works out to around 6.5x for MITK, maybe closer to MF’s number if taking the sales up to the end of CY20 instead of their FY ending 30 SEP 20.

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