A Dirt-Cheap Microcap with Outstanding Growth
5.9x earnings. 20% CAGR.
Key metrics:
5.9x earnings
20% annual revenue growth over the past decade
Aligned management
Every now and then, you come across a stock that looks too good to be true.
High returns on capital, steady growth, founder-led, and run by aligned management.
Still, the valuation makes no sense, as if the market is telling you something must be wrong.
And often, that’s the case.
So you dig deeper.
You look for the problem.
Why is this thing trading for 5–6x earnings, despite growing 20% a year for a decade?
But you find nothing.
You keep digging.
Is management corrupt? No.
Do they have hidden liabilities? No.
Too much debt? Nope.
Accounting tricks? None.
Losing customers? No!
Then why the hell is it so cheap?
Well, my friend, it seems you’ve just discovered market inefficiencies.
The truth that markets aren’t perfectly rational.
That not every small company is perfectly covered by Wall Street analysts.
That there are still small, forgotten corners where opportunity hides.
At the 2001 Berkshire Hathaway annual meeting, Warren Buffett said:
“I would say if you’re working with a small sum of money, and you’re really interested in the business, and willing to do the work, you will find something. There’s no question in my mind. You will find some things that promise very large returns compared to what we can deliver with large sums of money.”
Buffett stopped looking for these anomalies long ago. His capital base simply became too large.
But for smaller investors, these pockets of inefficiency still exist.
And today’s company might just be one of them.
A small, overlooked business growing at a rapid pace, with a strong balance sheet, aligned management, and consistent profitability, all trading at dirt-cheap multiples.
Let’s take a closer look.