A Double Hiding North of the Border
Why we're excited about a small(ish) company in Maple Leaf country
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Many investors would argue that it’s already difficult enough to invest in retailers in general, and even more so in the current environment. However, we came across a company that has piqued our interest in its future and impressed us with its overall business model and execution.
It’s actually one of the companies that we flagged in our April 28th post as a company of interest that you should look into, and fast forward to now, and it’s already up 40% since.
But just because it’s had a great run thus far, that doesn’t mean it’s over, and we think that it still has plenty of room to run. Similar to our recent view on LENSAR (LNSR), which was up 70% in a month before accepting a buyout offer, after it had already 3x’d.
Some key points
Has grown topline >20% a quarter for the last 11 quarters, with the average being 32%
Inflected profitability and grown adj. EBITDA over the same time frame (11 consecutive quarters); average y/y growth of 188% over the last 7 quarters
Operates in a recession-resilient market that uses a strategy that would require competitors to upend their entire model in order to compete → unique moat
Has achieved record gross margins, has never raised capital outside of its original IPO, and has an active buyback in place (~5% of MC)
We think that this stock could double with continued operational leverage improvements from economies of scale and could double margins in the next few years while operating in a recession-resilient industry.
If you need a reference to our past work, click here, and for PMs and anyone else interested, we’re going to include a 1/2-pager summary for those who don’t need a deep dive read.
With that said, let’s begin.
Our track record of picking winners has typically come from us finding a simple-to-understand business and determining whether or not the market is giving it the recognition it deserves. We believe this is one of those winners.
The company we’re referring to is…