Summary
Highlights
The video starts with a brief overview of the market's performance, noting some companies in the green like Apple, Microsoft, and Google, and Intel still up 20% for the week. Key news involves Oracle being in talks with Meta for a potential $20 billion AI cloud computing deal, which is seen as positive for Oracle.
The first company discussed is Rubric, a cybersecurity firm providing data protection solutions. It has a market cap of $15.4 billion, 78% gross margins, and a 3-year compounded revenue growth of 20.5%. Despite not being profitable yet, its free cash flow stands at 17.9%. The company emphasizes its focus on cyber resilience and recovery, aiming to scale from $1 billion to over $10 billion by expanding workloads and forming strategic partnerships. The stock recently recovered after a dip post-earnings, signaling a potential buying opportunity.
Sezzle, a fintech company in the 'Buy Now Pay Later' space, is the second company. Despite its incredible growth, it's still a small company with a market cap of $3.1 billion. It boasts strong margins and high growth rates, with GMV growing 74.2% and revenue up 76.4% year-over-year. The company reported a net income of $27.6 million with a 28% net income margin. Sezzle also recently engaged in a share buyback program, indicating management's confidence in its valuation. The stock, like Rubric, has seen a dip and stabilization, presenting a research opportunity.
Shift4, a well-known fintech company in the payments space, is the third company. It has a market cap of around $6 billion, with a forward P/E of 14.5x. Shift4 has demonstrated strong growth, expanding 12x in EBITDA and 25x in free cash flow since its IPO, often through strategic acquisitions like Global Blue. The company is expanding its total addressable market beyond traditional sectors into sports, online gaming, and international markets. Despite analyst projections for slower revenue growth in the longer term, the company projects significant free cash flow growth and a potential exit run rate of $1 billion in adjusted free cash flow by 2027. The stock experienced a crash after its last earnings report but has since stabilized.
The presenter concludes by highlighting the 'multibagger potential' of all three companies due to their relatively small market caps and significant growth prospects. Rubric, despite being the largest, offers a premium in the cybersecurity space. Sezzle, at $3 billion, is a potential acquisition target with high growth. Shift4, at $6 billion, has a massive addressable market. The presenter ranks Shift4 and Rubric as close contenders for investment, followed by Sezzle.