Another stock where I have second thoughts : Step One (STP).STP...

Another stock where I have second thoughts : Step One (STP).
STP is a manufacturer of bamboo underwear (mainly for men), sold online only.

The stock was listed at the end of 2021 and had a very bad start as they completely missed their earning forecasts (too much growth driven initially, at the expense of profitability).
Since then, the stock had a major rebound, but it is still not expensive if they can continue what they are doing now : strong organic growth, high margin, low capex requirement.
So they have a significant level of free cash flow (free cash flow yield of 6.8 %, based on my estimate of a recurring free cash flow).

The company was created in 2017. It went into the UK in 2020 and in the US in 2021.
It also launched women's underwear products in Jan 22 (now represents 13 % of their revenues).

3 main elements to check with them : website traffic, conversion rate and advertising budget.
Everything seems to go in the right direction now.
Other key element : they have now 60 % of repeat customers which is high for such a young company.
People seem to appreciate their products and do not have a major problem with their premium pricing (average revenue/item of 18.50 $).

In FY 24, they had 84 m$ of revenues (+ 29 % yoy).
Obviously, this is small vs the size of their potential market (the Australian underwear market* only is estimated at 1.7 bn$).

* men + women.