Finally, a Buy on Valuation at 6-7x EBIDTA….This whole situation has a NVIDIA Feel to it. How a short report comes out and on more than anything it was a call on valuation following a multiplying of the share price. NVIDIA has already bounced back and CRH will follow suit
I thought earnings looked good today and the last of the weak hands and Momentum traders have moved on. I was surprised we didn’t trade green today because fundamentals should overtake pure speculation and I feel thats where the opportunity lies as the growth story is still intact.
Looking at my go to Analyst at TD he has EBITDA estimate for 2018 of 73.8M US$ (100M CAD) for EBITDA. So, given that earnings potential you are looking at a valuation of 6.5x EBITDA --TOO CHEAP
Even a move back to more reasonable valuation following this shake out of 8-10x EBITDA gets you back to a share price of 12.00/share at the midpoint of the range or 45% upside.
Risk Reward in this volatile market I like it right here as the story has been de-risked based on valuation and you we just saw their seasonally weakest Q of the year where revenues were up 63%.
Use the 200DMA average as your stop and let ‘er ride.