BUY HOLD SELL: Luke Laretive from Seneca Financial Solutions and Steve Johnson from Forager Funds Management analyse some hot stocks from the first half.
Grady Wulff: Let's dive straight in. Luke, I'll start with you. First up we've got RPMGlobal, the leading provider of mining software, advisory, and training in Australia and around the world. Talk to me about it. Is it a buy, hold, or sell for RPMGlobal?
Luke Laretive (BUY): It's a buy from us, Grady. I think it's a fantastic business. Been going through a multi-year transition to recurring revenue. We're starting to see the operating leverage in that business really come through now. At the half, they did 25% revenue growth and 89% EBITDA growth, to give you some concept of where this business is going. It's still only on 12 times. We think this can re-rate to a typical ASX software multiple, and as a result, it's a buy from us – a significant upside here.
Steve Johnson (BUY): Buy for us as well. We've owned this stock for six years, and we're not getting off the train yet. I agree with everything that was just said. I think you've seen the operating leverage. It actually could have worked that out quite some time ago. It's been happening underneath the surface for quite some time. It's now becoming really obvious because the cash flow is there, you're seeing it drop through to the bottom line. For us, the exit here is a takeover. I think it belongs in a global big business, and someone is going to be able to take substantially more cost out of it. So the earnings will be higher for a buyer than they are as a listed company today, and we should get a nice fat premium when that happens. And we've got a guy running the business, he's got a track record of selling these businesses. He knows what it's worth and he should get us a fair price.
https://www.livewiremarkets.com/wir...s-hottest-stocks-and-2-in-the-too-hard-basket
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