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Top Tier Microcap Companies to Present in Las Vegas, Maj Soueidan to Moderate

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I recently had a conversation with Bobby Kraft from Planet Microcap where we discussed what a Tier One Microcap is and announced the Planet Microcap Showcase in Las Vegas that will be taking place from April 25 to 27, 2023. I made it clear to Bobby that if he wanted me to attend this year he would have to carve out a Top Tier Track. We came to an agreement. 

On Wednesday, April 26, I will be moderating presentations by the management teams of Top Tier Microcap or those possibly on their way to meeting the requirements indicative of top tier companies

We plan to give  each company the floor for 10-15 minutes, followed by a Q&A for a live audience.

Bobby asked me to extend an invitation to the GeoInvesting network. It’s free to attend.

If you are in the area or want to get away for a few days, stop by and check out my Top Tier Track.

Other Topics I Discussed With Bobby

In my conversation with Bobby, we reminisced about some of the stocks that I pitched at one of his past in-person events. One of them was Rand Worldwide (OTC: RWWI). RWWI has seen a 300% peak return since its addition to our “Favorite Stocks’ Model Portfolio in April 2019, and a 250% return since I pitched the stock at another one of his events in June of that same year.

We also talked about a Fireside chat style conversation session I did at last year’s Vegas event with the CEO of Intouch Insight Communications (OTC: INXSF). To my surprise, Bobby clued me in that it was to THE most well-attended portion of the entire event!

Bobby and I are expanding on this and trying to make it a more formal kind of track at the Planet Microcap conferences to help bring awareness to companies that meet some Important tenets of the Tier One Criteria that we set in GeoInvesting.

We will also mix in a few names that could be on their way to making the grade in future years.

My goal is to help the attendees see these Tier One Companies, as it can be hard to identify which companies to look at when attending these conferences.

While I’m not saying they’re all great picks, they all have a few common qualities: if they execute their stated business plans they have the potential to generate substantial revenue, are at or near profitability, and have clean capital structures.

Some other qualities of these Tier One Microcap Companies include strong management, healthy insider ownership, profitability, and long operating histories.

By the way, an advantage of considering companies that do not meet all of our Tier One qualities is that as investors, we want to identify some soon-to-be-great companies before they attain Tier One status and are discovered by the “crowd”.

Bobby and I also discussed a few other items of introspection that feeds a bit into the Growth At A Reasonable Price (GARP) theme that is coming into more of our focus. In the last couple of years, we’ve decided to mostly depart from speculative plays. We are looking for substantial companies that you can value on earnings, and not on just revenues and/or business prospects. We also talked about:

The current state of the microcap market

A new product launch highlighting my daily and weekly CliffsNotes on microcaps.

My CliffsNotes cover key points from company filings and press releases. However, I am most excited about the upcoming rollout of a suite of special microcap research tools, which you’ll get more information on soon.

Have a great week!

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Research Cliff Notes 

Data Communications Management (OOTC:DCMDF) CliffsNotes (updated to take into account interview with management last week and Q4 results)

The company finished 2022 with CAD $273 million in sales. DCMDF allows its customers to create, organize and distribute their marketing and business communication collateral. As far as we understand, the collateral is usually distributed in print form (DCMDF prints it). 

Since the arrival of a new CEO in March 2021, the company has been transforming its business to more of a digital technology first model, as opposed to print first model:

“We are very pleased with the progress we made in 2021. Since I joined DCM on March 8, 2021, we’ve implemented a clear strategy to move from a “print first” company to a “digital first” company with a well-defined five-year strategic plan to drive our execution.”

Prior to the CEO’s arrival, the company had experienced a decline in sales for 9 straight quarters. It’s worth watching for a few reasons:

  1. The company has now posted 5 consecutive quarters of sales growth and 6 straight quarters of EPS growth.
  2. It has reduced debt from $80M in 2019 to $27M.
  3. DCMDF just announced an acquisition (Donnelley and Sons Canadian division) that will more than double the size of the company.
  4. It reduced expenses through cuts in staffing and the closing of certain locations.

Valuation:

Shares are selling at a P/E of 6. While that might be an appropriate valuation in-line with the company’s slow-growth-industry, the P/E could re-rate as the company’s digital focus gains momentum. For reference, Ennis, Inc. (NYSE:EBF) is a comp in growth mode selling at a P/E of 12x.

CAVEATS:

  1. The company will take on significant debt ($123M) to complete the acquisition.
  2. The company could be negatively impacted during a recession
  3. Marketing solution companies can exhibit lumpy quarterly revenue due the project based nature of the business. However, inclusion of Donnelly should ensure consistent revenue growth for at least the next year.
  4. Shareholder equity is negative, due to business’ condition before the arrival of the new CEO.
  5. Sales have only been increasing at less than 10% and, along with EPS, are forecast to be flat in 2023. However, the new acquisition (if consummated)  will double the size of the company, so sales growth is going to look good. We need to dig into what impact the acquisition will have on EPS.

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Source: https://geoinvesting.com/top-tier-microcap-companies-to-present-in-las-vegas/


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