RE:Valuation scenario.I like your numbers because they are pretty conservative. Always nice to be surprised to the upside rather than the downside. The reason I like conservative estimates have to do with the unknown unknowns, many of which reside on the macro side.
Having said that, there's no question the risk-reward from this level is heavily on the side of reward. As a longtime investor, I still resist the temptation to go "all in." I'm sticking to my 10-15% of portfoilio in smallcaps. About one-third of this money is in KNR, with the rest spread across another 12-15 companies in much smaller amounts.
So ... I have enough to make a big difference in my portfolio without being too highly concentrated.
That's my approach. Others may feel different. :)
canyousayiii wrote: Trying to figure out the risk/reward today. They are gearing up for production capacity of 20k units per month. Let's assume there is a reason for that!!! Let's work backwards. Assume they sell 3,000 units per month. Assume revenues to KNR of $7,000 after a generous distributor cut and let's assume KNR sells nothing directly (very unlikely but conservative). That is $21 million monthly or $252 million annually. Slap on a 4 times sales multiple and that is about a billion market cap divvied by 40 million shares. $25 SP. Using the above assumption of 3,000 unit sales monthly, not including current core business which may benefit from BioCloud visibility, not counting recurring cartridge revenues. What am I missing? Too high of a sales multiple? Half it. $12 SP. So $4 for every 1,000 units sold. At these ratios, sell 4,000 units, and that is $16 SP. 5,000 = $20 SP. 10,000 = $40 SP. Go back to 4 times sales ratio, double these. What am I missing? A buyout offer once they they start delivering sales and one that will not give us the above premiums if the current SP doesn't move? I don't think I can come up with better numbers on any of my other plays, but before I put much more into this basket, what am I missing?