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:
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“… 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.
I’m pretty sure it’s MITK althought I don’t think they’re truly fintech. Meets all the criteria.
I was thinking Payoneer. which will be introduced through a SPAC under symbol FTOC, but I don’t think the acquisition has happened yet.
MITK?
I also think MITK
Sure sounds like MITK
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.
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.
“Trading at 6.2X sales” is Price to Sales ratio, or P/S. You can look up all major metrics and ratios on Yahoo Finance. Plug in the ticker symbol and click on the Statistics tab. You will see a table and a bunch of other indicators under it. Good luck!
The disclosure policy at the end of any MF article on the company confirms that it is recommended by one of their services
Nice catch
It seems that it is MITK, but i expect that this company will be bought buy some larger company in the next couple of years before it even reaches this multi bagger goal. Good one for acquisition.
What does 150x growth mean?
150 times the current share price
I think that “150x growth” is a reference to the market cap. It would make it an $100 billion market cap company. I don’t think that their stock price, which is currently about $15, would grow 150 times – it would make it an $2,250 share.
Mkt cap is calculated by stock price* amount of stocks so if the MktCap will be x150 the share price will also be x150. There are reasons for it not to be true is if they do a split or reverse split or more offerings. The stock price could see 15*150. There are companies with low stock prices and high market caps and the opposite, by itself it is meaningless.
I doubt it is MITEK because MF says the stock is one that has never been recommended by them before. MITK already appeared in one of their list
How do you know?
Just pulled the article on MITK in SA written by Anders Bylund. It was recommended by MF on Oct.2 , 2020.
Ahh ok. The search is still on then!
This article is one of their free articles. It is not a recommendation in a service. They have many such recommendations that are not in an official service.
Hi folks. Love the responses to this. Is there any chance there’s a caveat to their “never before recommended” disclaimer? They did say “the team over at Extreme Opportunities: Fintech Fortunes has -just- recommended”—in my [short] experience “just” in teasers sometimes means months ago. Could that be the case?
Because other than that, MITK fits amazingly, here are MF’s stats vs. MITK’s numbers :
===Definitely fits===
-Mkt Cap [MF–$650M] vs [MITK–$652M]
-Gross Margin [MF–88%] vs. [MITK–86.32%]
-Price-to-Sales [MF–6.2x] vs [MITK–6.26x]
-Revenue [MF–$105M] vs. [MITK–$105.2M]*
*FY 2020 Revenue was 101.31M, but MF says “last year”. Q1 2021 ended in Jan. So if we look at Q2–Q4 2020, plus Q1 2021, it actually equals $105.2M.
===Potentially fits===
-Industry value [MF–$15.8B] vs [MITK–$15.8B**]
**MF article says “management” estimated this figure. I cannot find where Mitek management said this, but a very recent March 4, 2021 report values the identification verification industry at $15.8B by 2025. It wouldn’t be a long shot to think Mitek management just referenced this report or tweeted about it perhaps. See report here: https://www.marketwatch.com/press-release/identity-verification-market-growing-at-a-cagr-156-key-player-experian-equifax-mitek-systems-thales-group-onfido-2021-03-04
The ONLY thing that doesn’t match up is whether MF recommended it previously, but maybe my previous note above satisfies that?
Great work. Appreciate it. We shall now call you Stock Gumshoe Jr.
It is Mitek (MITK)
Yeah too much matches up IMO. Mitek