Stud – Nv5 Global, Inc. (NASDAQ:NVEE)
We Sold This One Too Early
Nv5 Global, Inc. (NASDAQ:NVEE) provides professional and technical engineering, and consulting solutions to public and private sectors. Essentially, the company has been benefiting from government and private enterprise infrastructure upgrades, propositions that require large amounts of capital to be deployed by the company’s clients.
After an interview with CEO Dickerson Wright in January 2015, we thought it immediately necessary to start comprehensive coverage on NVEE. Between our belief that the company was unfairly being typecast as a downstream victim of plunging oil prices, we knew that its business was largely unrelated to the various stages of volatile oil exploration infrastructure spending. We offered an article to our premium community as a follow up to the interview which we are making free for the next until February 18, 2022 .
The financials and guidance offered by NVEE continued to strengthen our view that NVEE’s boring story would far from translate into a boring stock price. Infrastructure build outs in its served industry, as well as management’s aggressive acquisition strategy, telegraphed a growth story that we were excited to follow.
This once microcap stock is now a small cap stud trading at a market cap of $1.55 billion, half a billion from being a midcap, and was once one of our highest conviction picks. Once we exited our position, we quickly realized we sold way too early in NVEE’s growth story.
The stock increased from $11.75 to $22.38 during our initial Select Longs Disclosure holding period between January 29, 2015 and May 19, 2015, with an ironically “meager” return of 90% compared to the 1075% return enjoyed by long term multi-year holders.
Furthermore, revenues increased from ~$100 million ~$300 million during our holding period, and profitability has increased ~200%. Today, the company generates ~$700 million in revenue, and profitability has increased nearly 5-fold.
Key Takeaway From This Study
In addition to positive industry trends, including the government doling out capital to rebuild America’s infrastructure and benefits offered by this legislation, it was the strong management team of NV5 Holdings, Inc. that ticked off one of our most important Tier One Quality Standards that we look for in a microcap stock.
More specifically, NVEEs management team is composed of seasoned industry veterans who have already proven themselves to be highly successful in their previous entrepreneurial endeavors, and have actually worked together at past companies to build successful enterprises.
The lesson to be learned here is, when you have great management teams that have worked successfully together in the past keep rolling with them.
New Infrastructure Stock Ideas?
By the way, since the passing of Biden’s bipartisan infrastructure bill already signed into law and is slated to spend $1 trillion dollars, we have begun to look at our infrastructure screens and lists that we have compiled over the last 15 years. If any of the companies on our radar will benefit from the bill and check off any criteria as Tier One quality microcaps, we’ll be on the case.
As a matter of fact, we have one on deck to disclose on which we’ve already done a significant amount of due diligence, including a deep dive visit to the company’s facility operations headquarters. Get ahead of the curve with our next stock idea, and hopefully we have the next NVEE in our crosshairs.