GEO Investing

We are long shares of a company that caters to the needs of enterprises who build modern data centers and mission critical facilities. The company helps its customers design optimal building layouts. It also supplies them with equipment and recurring revenue services to efficiently operate and maintain their data centers.

This company entered our radar in June of 2017, when we briefly mentioned that we would start tracking it for our Premium Members.  We believed that restructuring efforts were about to boost the revenue and help the company reach consistent profitability. We also believed bullish comments from its Q1 2017 conference call transcripts went largely unnoticed, putting more astute investors at a clear advantage.

Many microcap companies do not generally attract a lot of investor participation, giving those who do participate a huge information edge. We recently interviewed the CEO and shared my notes with premium members in a comprehensive article.  At a P/E of 6 on our 2018 earnings per share (EPS) assumption, we think the stock is trading at a deep discount. Once investors become aware of this comeback story, we assume shares will rise quickly.

Potential Return – Short term, +100% ; Longer term Multi-bagger

Asset Class Common equity

Industry – Data center design and support


CatalystsRestructuring entering growth phase; Cleaned up balance sheet; Industry gaining traction; Growth about to become apparent


Market Cap –  Microcap

The company is at the end of a multi-year restructuring process where it is replacing its larger revenue base business with a higher margin business. This is why year over year, sales have been down over the last few quarters, but we believe this is about to change. On its recent Q3 2017 earnings conference call, management stated that it is still on track to move towards its goal of achieving a quarterly revenue run-rate of $5 million and is now targeting 2018 revenue to reach $20 million with 10% adjusted EBITDA margins.  Meeting these targets would translate to meaningful EPS growth for the upcoming year, but we believe the company’s guidance does not take into account some of the added growth initiatives management discussed on conference calls.

Furthermore, the company has the confidence of an insider who is a committed financier under terms that are favorable to both the company and its shareholders. This is something we love to see in the microcap world as it sets the company apart from others sporting similar market capitalizations.  Obviously, it’s something that does not happen very often, so we are not about to miss out. We are extremely excited about this company’s business prospects and upside for the stock.

This stock, as well as others that we identified to be potential Multi-baggers, can be found here.

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