AssessmentCan you comment on Zedcor's results please and is it still a buy? Also, how is Vitalhub's valuation to its peers and is it a buy as well? In Q3 2024, ZDC reported revenue growth of 42% to $9.1M compared with $6.4M for the same period in the prior year, largely due to strong demand for security towers in Canada. EBITDA also grew strongly by 49% to $3.4M. The company recently expanded its operations in the US meaningfully. Now, the US accounts for 10% of ZDC’s total revenue in Q3, and the portion is also growing strongly. ZDC indicates that the utilization rate for the fleet of security towers in the U.S. is near 100% capacity, signaling a solid growth lever going forward. We think ZDC reported very solid numbers and would be comfortable holding and buying some here, while being mindful of its small cap risks. Investors need to size the position conservatively as small-cap names like this could be volatile.
On the other hand, VHI’s valuation is around 21x forward EV/EBITDA, which expanded meaningfully recently as investors discovered the name and VHI continued to demonstrate consistent execution. Its valuation is not cheap but it still looks fine compared to other serial acquirers like DSG (32x) and CSU (23.4x). (5iResearch)