An Undervalued Microcap Trading at 2.6x Earnings
2.6x earnings. 40% CAGR. Strong backlog.
Key Metrics:
2.6x earnings
40% revenue CAGR
Strong backlog
Ever wondered how Buffett found a stock at 3x earnings?
How he came across Union Street Railway selling at $30 when it had $100/share in cash, or how he found Genesee Valley Gas at a P/E of 2?
At the 2001 Berkshire meeting, someone asked him exactly that.
Here is what he said:
“If you’re working with a small sum of money and you’re willing to do the work, you will find some things. Some things that promise very large returns, compared to what we will be able to deliver with large sums of money.”
Back then, he flipped through thousands of tiny companies, going through the Moody’s Manual page by page.
Just to find one or two businesses that the market had missed.
Overlooked opportunities he could put a little money into for outstanding returns.
And as we know today, that work paid off.
Today’s stock looks exactly like that. It’s too small for institutions to care, and too unknown for mainstream Wall Street to notice.
But that’s exactly what creates the opportunity.
It’s a small U.S. business trading at just 2.6x earnings. That’s not a typo.
Revenue has grown at a 40% CAGR over the past five years; the company has paid off its long-term debt, and the current backlog looks strong.
It’s the kind of stock Buffett would have circled in his Moody’s Manual back then.
Let’s take a closer look.