OTCPK:MECVF - Post by User
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Possibleidiot01on Jul 14, 2022 2:27pm
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Post# 34824849
Stephen Takacsy - Top Pick - expanded comments
Stephen Takacsy - Top Pick - expanded comments MDF COMMERCE (MDF TSX)
A beaten-up technology stock with tremendous value and is a potential catalyst.
MDF Commerce is one of many overly beaten-up tech stocks. It develops and manages e-commerce platforms for larger corporations such as Sobeys/IGA, Dollarama, and Aldi, one of the largest food retailers in the world for a click-and-collect platform for its 1,000 U.K. stores. MDF also owns business-to-government platforms enabling suppliers to bid on government contracts called “e-procurement.” MDF is consolidating this sector in the U.S. through mergers and acquisitions and made a transformational acquisition last year of Periscope making them the number one player in this fragmented market. This acquisition required a large amount of equity financing, which is why the stock initially came down. Labour shortages and COVID restrictions have delayed deployments which recently hurt financial results. Roughly 80 per cent of MDF’s sales are high-margin recurring SaaS revenue. The stock is dirt cheap and trades at around 1x revenue and an activist U.S. fund has taken note and recently disclosed that it has accumulated 11 per cent of the company. There are also two new very strong board members with serious tech experience. One plan to unlock value would be to sell the e-commerce business, repay all debt and focus on the higher multiple e-procurement business. Even using very low multiples would justify a stock price north of $6, which is more than triple what MDF is trading at today at $1.70.