I find it utterly amazing (and not in a good way) how some SAAS companies like GSW and BIG ever got to the size they got to with relatively no receipts.
There are still many asx listed companies with ridiculous mcaps yet they produce little in way of established clients and receipt intake. And many are cash burning money pits.
One SAAS I am really liking is ASX: MPW (MSL Solutions). It provides SAAS solutions into a fragmented hospitality industry and has some very big customers. The most important part is that it is actually:
1) Cash flow neutral - and bordering on cash flow positive.
2) Intakes circa $36m in receipts P/A.
3) Only has a market cap of $40m
4) Has a proven brand, customers and product need.
5) Truely scalable - with 45% of receipts being recurring revenue!
BUT THAT JUST HIGHLIGHTS HOW RIDICULOUS THE MARKET IS!
$37m in receipts / bordering on cash flow positive / has scalability and it only has a mcap of $40m!!
To be honest I don't understand what people are looking for when they choose stocks. It is like they are all going after the next facebook or google unicorn which is so misguided in strategy.
Look at ANO for example - it has the same attributes as MPW but it is in a different industry and both will likely obtain strong growth because they are right on cash flow positive and have scale.
And who knows - perhaps a MPW or a ANO may unicorn? But who cares - I would gladly rather take the stronger slow route of lower consistant returns than chasing a unicorn pipe dream.
In my opinion what wont unicorn is some hyped up stock with a big dream but no substance. And that is where I personally believe the market goes so wrong when they choose stocks and subsequently price them.
Finally, I do wonder if anyone even did a reasonable ROI calculation when they chose The GSWs or BIGs?? When they are mcapd so highly and produce little in way of actual receipts - does anyone get there heads out of the clouds to consider how long it would take them to get a reasonable ROI at their investment point?
Anyhow, I am not attempting to cross sell but I do love to talk about the ridiculous mcapping of certain stocks. I think ANO especially has so much going for it when considering its realistic projections and current mcap.
ANO Price at posting:
55.0¢ Sentiment: Buy Disclosure: Held
