New Large Long-Term Contract For Microcap Company Goes Unnoticed By Investors
HOW TO GET OUTSIZED STOCK RETURNS
Our Proven Winning Formula Has Identified Another Favorite Idea With Potential Multi-Bagger Returns.
Offering On ONLY 10 Seats For This Idea
So Many Investors Tend To Stay Away From Ugly Microcap Companies. They View Them As Risky And Boring Companies That Will Never Grow. However, We Can Flip Their Aversion To These Stocks To Our Advantage And Use It As An Opportunity To Invest In Very Special Companies At Extremely Cheap Prices – Companies That The Market Is Grossly Mischaracterizing.<br>
If You Are One Of Those Rare Investors That Can Think Outside The Box And Likes To Go Where The Crowd Is Not, Then You Might Like One Of Our New Top Ideas That Encapsulates The Notion That The “Tides Are Changing”.
A Special Company We’ve Discovered
We have found a 41-year-old company, that after years of stagnant growth is about to experience a rapid change in good fortune, without the overhang of a messy balance sheet. We believe investors will soon find it. I prepared a research report on the company, along with a virtual video presentation where I discuss why I like the stock. Upon subscribing to GeoInvesting’s premium service, you will immediately receive both pieces of collateral and all of our premium services.
A WINNING FORMULA
OUTSIZED RETURNS =
There Are Two Words That Sum Up How To Increase The Odds Of Finding Stocks That Will Rise In Multiples Over Their Current Stock Prices: (Click To Find Out)
Change + Ignored
I am not necessarily talking about companies that are already experiencing growth in sales and earnings. That is too obvious. To really “outsmart” the market, we like to explore stories that appear bleak on the surface.
I gleaned some of the most exceptional outsized returns by investing in ugly companies showing no growth or that had problem balance sheets. However, I believed a sea of positive change would eventually occur with these companies.
Changes can come in many forms and within various time frames. Some of the ways companies can guide change are by:
• Finding ways to reduce debt
• Selling underperforming assets to concentrate on the most profitable parts of the business
• Making an acquisition that will revive the growth potential of the business
• After years of no innovation and growth, selling new products into an established and loyal customer base
How Change Catalyzes Success
• First, investors can begin to see a clear path that will allow the company to be able to report strong sales and earnings growth
• Second, investors may view the company to be a less risky investment
• Third and most importantly, investors may be willing to re-rate the valuation of the company to higher levels, sometimes “overnight.” This is how we get a multi-bagger or multi-year compounder.
But There Is One More Piece To The Formula. Investing In Microcaps Takes The “Ignored Advantage” To Another Level.
As you may know, microcaps are broadly labeled with negative stereotypes which scare many investors away from the space. Now, I am not denying that the microcap universe can contain some unscrupulous companies. But does that mean that we should not try to find great companies whose stock offers returns that big caps as a whole do not consistently produce? Now, I am also not saying that big cap companies can’t provide great returns.
Just look at Monster Beverage Corporation (NASDAQ:MNST), the best performing stock of the decade. However, finding great companies early is sometimes just easier when your peers are not looking for them.
For example, here is a table that shows that the smaller you go down in market cap, the better returns you can achieve, by as much as 8.24% per year:
*What Works On Wall Street by John O’Shaughnessy
Oh, and by the way, MNST was once a microcap stock 😊
“Changes Are A Coming” Case Studies
A couple examples can illustrate the points I am hammering away on.
Case Study One – ESCC
(Planetarium equipment, content and services)
What the market got Wrong
Pushed shares all the way down to 14 cents by assuming a multi-year past due debt obligation would break the company
Our divergent take that we shared with GeoInvesting premium subscribers, along with a disclosure that we were buying the stock:
Based on thorough research, we not only concluded that the company would quickly resolve this issue, but when it would happen.
The End Result
Stock eventually rises to a high of $1.98 (1,314% gain) and eventually gets acquired at $1.19, allowing our premium subscribers to capture gains of 705%.
Post-game analysis
Investors re-rerated the valuation of the stock to higher levels once it became evident that the company’s business risk had been significantly reduced. Further share price gains were limited by the company’s inability to find ways to accelerate growth, a situation we made our premium subscribers aware of from the moment we published and sent them our bullish thesis.
Although the case of ESCC only dealt with one type of change – a reduction in debt – it can be really awesome when a scenario has the potential to contain multiple positive change catalysts. ZYXI is a perfect example of this.
Case Study Two – ZYXI
(Pain management medical device)
What the market got Wrong
Pushed shares all the way down to 40 cents by assuming a large debt obligation would break the company and that regulatory environment challenges would not allow the company to recapture sales and EPS growth it had once achieved.
Our divergent take that we shared with GeoInvesting premium subscribers, along with a disclosure that we were buying the stock:
Based on thorough research, we concluded that the company would quickly eliminate its debt and that regulatory changes were occurring that would allow the company to rapidly grow its sales and earnings.
The End Result
Sales have risen 300% to $80 million and the company is solidly profitable. The Stock eventually hit a high of $29.72 and currently trades near $14 per share. Now, to be clear, we sold the last of our position at around $8.40 before the stock’s run to $29.72. However, as a premium GeoInvesting subscriber you would have had the chance to capture gains of just over 2000%, alongside us.
Post-game analysis
Investors re-rerated the valuation of the stock once it became evident that the company’s business risk had been significantly reduced and that the company had embarked on a new phase of sales and EPS growth
Debunking Negative Stereotypes
Both of these case studies debunk the stereotype that all microcaps are low quality companies with little revenues and little operating histories.
ESCC was founded in 1968, generates over $30 million in revenue, has Walt Disney Company (the) (NYSE:DIS) as one of its major customers and controls between one third and two thirds of its target market.
ZYXI was founded in 1996, generates around $80 million in revenue and is the market leader.
Both examples also throw water on the common belief that all penny stocks are pieces of trash.
Why We Are Proud Of Our Work
Over 50 companies profiled on Geo acquired, nearly all at a premium to previous day’s closing price, or price since inception of coverage
26 percent of all our disclosed longs have at least doubled at their peaks during the holding period of the position on GeoInvesting.
GeoInvesting longs compiled average is over 44% since 2014.
Stats show that even after we closed our positions, if we had held our positions, the returns would have dwarfed what we reaped, reinforcing the case for longer-term investing.
GeoInvesting longs (termed GeoBargains in the early years) compiled average was over 30% from 2009 to 2014.
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“I personally really, really believe that you have the best personal approach to speculation…best odds by far …than anyone else I’ve seen in my 40 yrs at this….no kidding Maj… the fact that it is the closest to my own has something to do with it…as I have been hurt so many times that I only take the smallest risk possible in choosing an investment campaign.”
“Geoinvesting is the most valuable microcap research service available today. Their breadth of coverage, when considering depth of analysis, is the most expansive we have yet to encounter. Their coverage focuses on actionable ideas. Their analysis includes considerations of timing and most importantly their thesis and corresponding granular support for their views; and they are transparent with respective to their own positions in the names they cover. Geoinvest’s prinicipal, Maj Soueidan, is one of the best microcap investors in the equity markets today.”
“Hi, I have already taken some action and purchased some shares in [the some of the stocks you cover]. So far with the information from the GEOinvesting portal I have been able to monitor and understand those shares and navigate the web page easily. The information I am getting from the portal is extremely helpful in understanding why stocks go up or down. Thank you so much for helping me get started and coaching me through this, I appreciate everything Maj, and the Geo team have provided me with.”
“Thank you for your e-mails. I am glad that I was able to join GeoInvesting. Microcaps are one of the very few niches where a retail investor can do well, and your service looks sincere and solid. I learnt to know about it from a podcast interview with Nate Tobik and Fred Rockwell. I’ve bought a small bucket of stocks that are in the portfolios but haven’t run up yet. From now on I will focus on the daily morning newsletters and add something new that looks promising. I’m grateful that you make the information available through e-mail and not only through Twitter.”
“Hi Maj, Been a GeoInvesting member since Summer 2018. You opened my eyes to the inefficiencies and opportunities in the microcap market. Looking forward to learning more from you and the GeoInvesting team.”
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EXPIRES November 29, 2020
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