Have a favorite stock we haven't discussed?

Saul,

A fast growing and profitable RuleBreaker and SuperNova pick is ProtoLabs, PRLB. TMFMattyA just published a review of the recent quarter. I have looked several times, but never gotten in. Heard of it? Reviewed it?

KLVanLiew

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KLVanLiew,

If I recall correctly, Saul used to be invested in PRLB but sold out due to the relatively high valuation - that is, the company was (and is) growing revenue and earnings at about 30%, and was trading at a fairly high P/E ratio at the time of his sale compared to those growth rates (P/E of about 60 or so at the time? I could very well be off on that). Currently, PRLB trades at a P/E of 52 based on my quick and non-double checked calculations, which still seems like it mayyyy be a tad high for Saul’s tastes given the circumstances (please correct me if I’m wrong!)

Personally, PRLB is one of my highest conviction investments (4.4% of my portfolio, 7th largest holding, and my position as a whole is up 88% at the moment with my first investment up 150% currently). They are steadily growing at a rate of about 30%, and have stated that their goal is currently to bring in $1 billion in revenue yearly. They serve a highly fragmented market of product developers / engineers, and are growing both their customer base as well as their average revenue per customer.

They have just recently dipped a toe into 3D printing through their acquisition of FineLine prototyping. PRLB leadership had previously stated that they viewed 3D printing as a service which is complementary to their own offerings. I believe this to be completely ture. However, 3D printing is still an integral part of the design and protoyping process, and I think that ProtoLabs was very smart to dip their toe in the 3D water here. Relative to other 3D printing companies, PRLB is very reasonably valued, and it is not reliant solely upon 3D printing - rather, it is an additional service which they can attempt to sell to their existing customers, many of whom previously utilized 3D printing to begin with. Margins are expanding because of the efficiency of their software which helps them achieve such incredible turnaround time with great prices (recent margin contraction can be attributed to the opening of a new manufacturing facility). They also announced a new prototyping capability on their conference call from the most recent quarter, one in a string of recent additions to their offerings (if you are an RB member I highly suggest checking out the board).

Anyways, a long answer to what I think could be an excellent investment idea. They recently hired a new CEO, as their previous one (Brad Cleveland), retired, in part as a result of his desire to find someone with greater business acumen (my interpretation, FYI) who could take PRLB to that “next level” and help them reach their $1 billion revenue goal. I think that PRLB is a little pricey at the moment, but should still make for an excellent investment going forward. They are still a fairly small company with a long runway for growth, and have been growing very steadily for many years now.

Nat
Long PRLB, and rather tired so I’m sorry for any blatant spelling or grammatical issues in this post!

6 Likes

Nat,

What a great description of the business and your thesis. I agree with you 100% and I’m very excited about PRLB’s future. I think Vicki Holt is going to do wonderful things for the company moving forward and I’m incredibly impressed with her and what she’s accomplished so far. I actually think that we may eventually see growth re-accelerate as she makes her mark on the company. Only based on a hunch, but I think she has the capacity to take this business to a level that Brad Cleveland couldn’t, although I think he did a great job getting them to this point.

Jason
Long PRLB

But I’m an old guy, totally out of touch with the very young. I know that no company selling to the young stays in fashion long-term. Brands can quickly fall out of favor when it comes to fashion. But how would I know, before it was too late. Just asking.

I’m middle age, 46, and I love Under Armour as an investment and their products. Their CEO is really great. They are growing a lot.

I think they will get as big as Nike one day. So, they still have a lot of runway left to go.

They are now selling UA shirts, pants, underwear, shoes, sweatshirts and more. They are expanding globally, but are still in the early stages.

They are not a company making clothing just for teens, even though teens do wear their stuff.

They market to athletes of all ages.

To me, if you wear t-shirts and get hot and sweaty in the summers, try a UA T-shirt and see what you think.

Just a few quick comments.

mazske

2 Likes

I’m 53 and love the UA golf shirts and shorts. Probably not as much as Footjoy but more than other brands I have tried.

Htownrich

Below is a seeking alpha article on Acadia Health Care:

Acadia Healthcare (NASDAQ:ACHC) provides inpatient behavioral health care services, including psychiatric and chemical dependency services. The stock became a Zacks #1 Rank this month after significant bumps in analyst earnings estimates for this year and next, with 2014 EPS projections moving up to $1.44 from $1.30, representing 34% annual growth.

And 2015 estimates were lifted to $1.96 from $1.58 in the past two months, equivalent to 37% annual EPS growth. Analysts have become much more optimistic about the company as its strategies of both organic and M&A-based growth are bearing fruit.

With a mix of inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs Acadia Healthcare has a comprehensive approach to helping people overcome debilitating mental and substance abuse issues.

Clearly this is an area in our society that is seeing more patients and need for quality care, not less. And the tailwinds of the Affordable Care Act (ACA) are supporting growth in this company’s programs.

Buying Growth

Acadia Healthcare has acquired about 1,700 beds from the spree of seven acquisitions executed in the past 15 months. The latest acquisition of Partnerships in Care (PiC) last month alone added 1,200 beds, thereby appreciating inpatient volumes. The addition of PiC also impelled an earnings accretion of 17–18 cents per share, before expenses. Management now expects EPS of $1.44–1.46 in 2014, up from prior estimate of $1.26–1.29.

The acquired and the organic bed expansion along with smooth execution of the ACA policies are expected to drive meaningful growth for the company going forward, as reflected by enhanced EBITDA margin in first-quarter 2014. Although higher debt remains a concern, steadily improving cash flows are likely to support leverage.

Here’s how Baird analysts view this specialty hospital, as they recently raised their EPS outlook and price target from $56 to $60…

“ACHC remains our top growth idea based on superior organic/M&A-driven growth, under-appreciated ACA upside/policy tailwinds, and lower reimbursement risks. Our $60 price target is derived by applying a 30x P/E multiple to our 2016 estimate. We justify that multiple as reasonable based on our belief that ACHC should be capable of growing earnings 30%+ over the next 2-3 years if it can execute on its development strategy.”

ACA: Growing Pains and Progress

After all the opposition and lobbying to annul the law, the multi-year implementation of ACA is finally reflected in positive signs from healthcare providers (in the form of improved earnings), consumers (higher enrolments) and the market (wider coverage at lower healthcare spending). This paves the way for affordable healthcare facilities and expanded coverage for patients with pre-existing health conditions, while also bringing about 32 million uninsured citizens under the coverage umbrella.

The U.S. bears the highest health expenditures in the world at about 18% of its GDP. The Centers for Medicare and Medicaid Services (CMS) further expects this to rise to about 20% of GDP by 2022, thereby anticipating a sea-change in the dynamics of the healthcare industry over the next few years.

The Impact On Hospitals

The ACA is making the consumers stronger and the hospital industry can no longer cherry-pick their customers. Additionally, the hospitals are acclimatizing to payment reductions and wild price discriminations due to government insurance programs like the Medicare, Medicaid and online insurance exchanges.

And hospitals are keener to join forces with doctors and insurers for healthy competition and to serve their customers better, which will translate into higher admissions. Alongside, the reduction witnessed in uninsured patients owing to ACA are also expected to drive revenue-per-admission and bottom line for hospitals going forward, while also increasing protection and lowering costs for patients.

Meanwhile, higher enrollments will also likely propel growth in demand for healthcare services, whereby the insureds are expected to increase by about 12 million this year. This will further drive the over-$3 trillion healthcare industry. As well, the reforms under ACA will go a long way toward reducing bad debt problems associated with hospitals.

Given this backdrop for the sector, Acadia Healthcare is a prime pick in a key care niche. And the stock looks poised for a move above $48 which would target its all-time highs near $54.

I am not talking about ACA being good or bad. But ACA as it is today may have an uncertain future. Dems are expected to lose the senate and the GOP is going to keep the house and that will open the door for anti-ACA rhetoric and attempts to redo/undo some or much of it.

1 Like

BWLD has been a favorite for a while. I think they are an old SA pick.

I’ve been considering trimming the position for over the last 6-8 months as it has gotten large, but they just keep growing. Definitely worth putting on the radar at least since it may be due for a pullback esp if tomorrows earnings aren’t great… but long term I think they still have a lot of growth ahead of them.

1 Like

I’m fairly new to this board, and enjoying it so far. So thanks for that. I saw this thread after reading a bunch of other posts on some micro caps, so I thought I’d toss it out here.

Issuer Direct (ISDR). I see it as a Rule Breaker type company. Maybe not the flashiest type RB, but they are getting it done.

Full Disclosure, I do own shares. And warning that it’s very thinly traded, and they do report earnings tonight, I believe.

It’s underfollowed, and just gaining traction. They were growing sales at better than a 50% clip organically with their cloud solutions to public company reporting and compliance items. They are sticky, once they get in with a company, and their margins are high. Over 70% gross margins. I like business models that are asset light like this. They then doubled the size of the company by buying PrecisionIR, and investor relations firm. So they are involved with all aspects of public company communications now. Below is a more technical summary from their profile. They have been very shareholder friendly (already paid dividends with their great cashflow), but then smartly withdrew that temporarily until the large PrecisionIR acquisition was paid for. Insider ownership is also high (which helps explain the shareholder friendliness).

So just wanted to put this one out there and I’ve enjoyed watching them grow and participated in the budding of their stock. I’m up quite nicely on it and it’s very early in this game.

Here’s the profile:
Business Summary
Issuer Direct Corporation provides disclosure management solutions, shareholder communications tools, and cloud based compliance technologies in North America and Europe. The company offers products and services that enable companies’ to produce and distribute their financial and business communications online and in print. It provides disclosure management system, a cloud-based business process reporting and automation solution that enables users the ability to disclose, manage, and communicate their respective messages from its enterprise SaaS network. The company?s disclosure management solutions consist of traditional edgarization, document management, typesetting, and pre-press design services, as well as its XBRL tagging services. It also offers shareholder communications services, including press release distribution, investor relation systems, and market data cloud services together with the PrecisionIR comprising investor outreach, annual report services, investor hotline, and Webcasting, as well as proxy and printing services. In addition, the company provides cloud-based product suites that offer corporate issuer and market data distribution partners the ability to connect to its market data cloud to access virtually customizable data sets of public companies, as well as the compliance driven modules of whistleblower, investor hotline, social disclosure, and e-notify request system. Further, it is involved in licensing it technology platforms. The company serves brokerage firms, banks, mutual funds, corporate issuers, shareholders, and investor relations officers, as well as professional firms, such as accountants and the legal community. Issuer Direct Corporation was founded in 1988 and is headquartered in Morrisville, North Carolina.

Howard

1 Like

I’ve been researching a small cap - Approach Resources Inc (AREX). It’s in the oil and gas E&P industry,and has a market cap 690.2 million. Price/book 1, forward P/E 12.5, $17.30 - $31.27 52 week range and closed today at $17.53.

Reported earnings 8/4/14 and the stock dropped >12% after missing analysts’ estimates - they reported 22 cents and analysts were predicting 23 cents. However, they also reported production increase 19% over 1st qtr 2014, 58% increase YOY and revenue of 73.4M for a 74% YOY increase. The production outlook for 2014 was also increased.
Their revenue has increased each of the last 5 years and they are one of the lowest cost producers in the Permian Basin.

Their website presentation shows enterprise value $1.1B. Their permian core operating area is 160K gross acres (138K net acres). They have a low acreage cost of $500/acre. Running 3 HZ rigs in Wolfcamp shale play and plan to drill 70 wells during 2014. Have liquidity of $404M as of 6/30/14.

CEO J. Ross Croft has been CEO and director since company founded in 2002. Insiders own 6.63% of which he owns 2.55%. He was named a regional winner for the Ernst & Young Entrepreneur of the year award for SW area north in 2012. And - he is also an Eagle Scout. What’s not to like?!

Anyone been following this company/have any insight?

Stormey

2 Likes