This month we are changing things up a little and featuring a small company I suspect you’ve never heard of. It’s an up-and-coming Canadian media production and distribution company.

The company’s content has increasingly shown up on Netflix, AppleTV+, HBO Max, Amazon and Peacock. Much of the programming is for kids and families, which is where the growth and more significant deal flow is. But the company has also had many years of success in reality TV.



It is a speculative investment and trading liquidity is thin, so treat it appropriately and space out share purchases. Part of the strategy here is that we’re following a micro-cap fund that I respect into this trade, and their successful track record, philosophy and long-term holding strategy lends credibility beyond the increasingly visible presence of the company’s programming.

The action of high-growth stocks continues to be sloppy despite the strong performance of most underlying businesses.

To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.



Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.



Enjoy!

As we march toward spring it appears real-world risks are decreasing (more vaccines, lower case count, etc.) while the market risk for growth stocks has gone up (higher yields, volatility, etc.), at least in the short term.

As I scanned through dozens of charts and evaluated stories for this month’s addition my focus was repeatedly drawn to one stock. The chart is compelling, the story is enticing, and the recent Q4 report and forward guidance illustrate sound fundamentals, supported by long-term demand growth.



The stock appropriately balances the potential risks and rewards in the current market.



Enjoy!

There is no shortage of great stories in the medical technology field. Today we’re jumping in on one that’s been on my radar for some time.

The company has just begun to commercialize a revolutionary technology for treating BPH and prostate cancer, which affects millions of men around the world. Regulatory approval is in hand across three continents, and revenue growth is in the 80% to 100% range.



There are plenty of challenges ahead, but this company appears to be on the path to enormous success.



All the details are inside. Enjoy!

In the closing days of 2020, when many people were focused on preparing for the holidays, a small software company went public through a SPAC IPO. The event occurred on December 23.

Part customer relationship management (CRM) platform, part lead generation and marketing platform, the company’s software helps home services companies grow and manage their businesses, and it streamlines the move-in and post-move journey for homeowners.



The stock represents a compelling way for investors to gain exposure to evolving consumer and business trends related to the housing market and home services, especially home inspection, moving, insurance and utility services. After a pandemic-affected 2020 growth could top 60% in 2021, then remain well above 30% for the foreseeable future.



All the details are inside. Enjoy!

This month we’re jumping into a company that specializes in precision medicine for cancer.



It has developed a sequencing platform that is able to analyze over 20,000 genes, far more than most competitor solutions. Even better, this platform allows analysis of both tissue biopsies and liquid biopsies.



Ultimately, the company is going after a roughly $40 billion market. Yet its market cap is a mere $1 billion today.



This company is still unknown, but that’s likely to change as it brings new products to market and continues to transform the market for personalized cancer vaccines and next-gen cancer immunotherapies.



All the details are inside. Enjoy!

This month we’re jumping into a small MedTech company that represents a picks and shovels play on the cell and gene therapy market. It makes biopreservation media and storage solutions for cutting-edge treatments, including Kite’s (owned by Gilead) CAR T-cell therapies YESCARTA and TECARTUS.

It’s a high growth company with exposure to both clinical trial and commercial-stage therapies. Covid-19 therapies and vaccines are part of the mix too. And there is an M&A angle that’s increasingly relevant.



The stock appears to have huge upside over the coming years. And we’ll get an update from management almost immediately after you read my reports since the company reports Q3 earnings after the close today.



All the details are inside. Enjoy!

While automobiles have become more consumer-friendly over the last decade there are still a lot of clunky technologies that drivers deal with.

Sometimes mobile devices pair seamlessly, sometimes they don’t. Sometimes, a car’s infotainment system functions so poorly that drivers are more distracted than they were in the good old days of reaching for cassette tapes under the passenger seat.



Today we’re investing in a company that’s developing a digital ecosystem for connected and autonomous vehicles that will make driving safer and more enjoyable for everyone.



It’s an under-the-radar story still, but not for long. Enjoy!

This month we’re jumping back into the pure-play software space with an up and coming SaaS company that has remained under the radar since going public in December, just a few months before the market tanked.

It specializes in social media management solutions, which are increasingly important as the trend toward digital transformation strategies gets stronger. Organizations increasingly recognize they must market to consumers through social networks.



Revenue growth is hovering around 30% and first profits are still a couple years away, meaning we’re still early to the table.



All the details are inside this month’s Issue. Enjoy!

This month we’re jumping into a new IPO that’s following in the footsteps of Livongo and Teladoc, bringing an innovative digital health solution to the masses.

As with those firms, this company sells solutions to companies, but it is the end consumer that uses the products, which are aimed at improving engagement and health outcomes while reducing costs.



With limited history as a public company, an earnings report coming next week, and the recent news that Livongo and Teledoc will merge, I expect shares of this company will be somewhat volatile. Please be sure to average in. We are starting with BUY A HALF rating today.



All the details are inside this month’s Issue. Enjoy!

Digital payments were already a big trend prior to Covid-19. But the pandemic has pulled forward demand for solutions that help businesses pay and get paid whenever, wherever, and however.

Today we’re profiling a small company that specializes in payment processing solutions. It’s relatively new to the public markets and has a market cap well under $2 billion.



While areas of its busieness have been harmed by the pandemic the big-picture story remains great. And management reported record sales activity in both March and April. And the stock’s looking great.



All the details are inside this month’s Issue. Enjoy!

Today we’re breaking into a familiar market by going back to the insurance industry.

But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).



The stock is acting strong and the fundamentals remain great, despite COVID-19.



All the details are inside this month’s Issue. Enjoy!

The big news this week was, of course, that the FOMC decided to pause and not hike interest rates at the June meeting. But as expected they suggested that a couple more 25-basis point hikes are in the cards throughout the rest of the year.


It feels like this “we want to keep you guessing” messaging is partly due to wanting to see how more data comes in and partly to keep investor expectations in check. The latter seems especially relevant given the S&P 500 just moved into a new bull market and AI enthusiasm has pushed a number of the MegaCap stocks to new highs.

While everyone has been watching the highlight reel of top performers with leverage to the AI theme lately, the real story this week is that more areas of the market are shaping up.

Yesterday, while the Nasdaq sold off, we saw the S&P 600 Small Cap Financial ETF (PSCF) pop 3%. That came on the heels of a 4% rally Tuesday.

Yes, yes, I know. Nobody really cares about this ETF. But small banks make up almost a third of total U.S. deposits. They matter, bigly.

The market was looking pretty good through last week. Then this week, with no meaningful progress on the debt ceiling, momentum has deteriorated.


Yesterday afternoon U.S. House Speaker McCarthy was on a roll, saying that things are going a little better, that he won’t put a bill on the floor that spends more than last year and that the President is realizing he has to spend less.



JPMorgan says they put the odds of no debt ceiling deal by early June at around 25% and rising.

No banks imploded this week, and there are rumors that the folks in Washington are making progress on a debt deal. Plus, we think the Fed may just pause for a bit, if not be done hiking rates.

Add it all up and the broad market is inching higher.

So far, the small-cap index is being left behind. That’s because of the high weight of financials and energy, and those two sectors look terrible in small-cap land.

Our portfolio companies wrapped up their reporting season this week, which means I have a chance to come up for air after an intense couple of weeks.

Somewhat as expected we had some nice winners, but also some losers too. It’s just that kind of market; and while I wish we could have had 100% of our stocks post terrific performance after reporting, that’s just not realistic.

The market has been a little soft this week as better-than-feared results from many large caps, including Microsoft (MSFT) and Facebook (META), have been somewhat overshadowed by renewed fears of banking turmoil. Thanks First Republic (FRC). That stock is down 96% from its 2023 high (and that wasn’t a particularly high price).

The market continues to act “fine” as we get a little deeper into earnings season this week.

At the index level, small-cap stocks are unremarkable. But I continue to attribute the underperformance to the high weight of rate-sensitive sectors (financials, energy, industrials, materials).

The market is still like a jar of mixed nuts. Some good, some bad.

Earnings season begins this week as large-cap banks start delivering Q1 results. Across small-, mid- and large-cap stocks (all sectors) earnings estimates have been trending down for several quarters.

Small-cap stocks have underperformed their larger-cap peers by a wide margin since Jerome Powell’s Congressional Testimony just over three weeks ago.


Part of that is because of the hawkish tone he struck. But mostly it’s because of the fallout of the SVB debacle, concerns over a 2023 financial crisis and what the spillover effects could be on the broader economy.

Yesterday the FOMC decided to move ahead with another 25bps hike, bringing its federal funds target rate to a range of 4.75% to 5%. The statement was missing the phrase, “...ongoing increases in rates would be appropriate,” which was present in the eight previous statements, suggesting the Fed may be done hiking soon.

The big news of the week is, of course, rising risks in the financial system following the failures of several smaller regional banks in the U.S. as well as instability in some larger institutions abroad, mainly Credit Suisse (CS). We also received February inflation data in the form of CPI (Tuesday) and PPI (Wednesday), which continue to show that inflation is moderating but isn’t collapsing. The February PPI report showed a 0.1% decline versus estimates for a 0.3% increase.

The big events so far this week have been Fed Chair Jerome Powell’s testimony before the Senate Banking Committee (Tuesday) and the House Financial Services panel (Wednesday). He sounded more hawkish than he did during his February 1 press conference.

Terex reported Q1 2023 results that beat expectations after the close yesterday. The company also raised full-year guidance by more than the Q1 beat. The result should quiet some of the concerns of a slowdown and help the stock do well today.

Flywire (FLYW) reported Q4 results after the close yesterday that beat expectations on the top and bottom lines. Revenue was up 42% to $73 million (beat by $7.55 million) while GAAP EPS of -$0.01 beat by $0.11.

Expensify (EXFY) reported after the bell yesterday and revenue was a touch light (2% miss) while EPS beat expectations on the back of strong margins. Revenue rose 7.8% to $43.5 million (missed by $850K) while adjusted EPS of $0.07 beat by a penny. Management reaffirmed long-term revenue guidance of 25% to 35%.

TransMedics Group (TMDX) reported another terrific quarter after the bell yesterday that should have shares trading higher today. Revenue grew 223.7% to $31.4 million (beating by a whopping $7.8 million) while GAAP EPS of -$0.21 improved from -$0.46 in the year-ago quarter and beat by $0.11. That result caps off a year in which TransMedics grew revenue by 209% to $93.5 million.

Sprout Social (SPT) reported Q4 results after the close yesterday that were close to expectations as bigger deals, partnerships (i.e., Salesforce.com) and price increases drove revenue and annualized recurring revenue (ARR) higher, despite a challenging market for IT spending. Revenue in Q4 was up 30.8% to $69.7 million (missed by $200,000) while adjusted EPS of $0.03 increased from -$0.05 a year ago and beat by $0.05.

Inspire Medical (INSP) delivered yet another better-than-expected quarter after the closing bell yesterday as Q4 results came in near the high end of management’s pre-announced range.

I don’t love the action in Procept (PRCT) this week. While the broad market has been acting well and a lot of “risk on” stocks have gone up, shares of PRCT have headed south.

I don’t love the action in Procept (PRCT) this week. While the broad market has been acting well and a lot of “risk on” stocks have gone up, shares of PRCT have headed south.

This morning Inspire (INSP) issued preliminary Q4 2022 results that came in ahead of expectations. Management said it sees Q4 revenue up 76% to around $137.7 million (consensus was at $117 million, or +49%).

Enovix (ENVX) management hosted a two-hour-long presentation from their Fremont, CA factory yesterday afternoon that went deep into the company’s outlook for battery production, sales projections and customer interest. The team also talked about new senior management hires.

We’ve only held Treace Medical (TMCI) for about a month, but it’s been a wild ride.

Shares of Treace Medical (TMCI) have sold off this morning following the publishing of a short report from Culper Research.